Pilbara Minerals share price falls despite record BMX auction

The latest BMX auction has seen lithium prices rise again…

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A brightly coloured graphic with a silver square showing the abbreviation Li and the word Lithium to represent lithium ASX shares such as Core Lithium with small coloured battery graphics surrounding

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Key points

  • Pilbara Minerals has released the results of the fifth lithium auction via the BMX
  • The company reported another increase in lithium prices
  • Pilbara Minerals intends to accept the highest bid of US$5,955 per dmt

The Pilbara Minerals Ltd (ASX: PLS) share price is dropping on Wednesday morning.

At the time of writing, the lithium producer's shares are down 2% to $2.84.

Why is the Pilbara Minerals share price falling?

Investors have been selling down the Pilbara Minerals share price today despite the company announcing the results of its fifth spodumene concentrate digital auction, held via its Battery Material Exchange (BMX).

According to the release, a cargo of 5,000 dry metric tonnes (dmt) at a target grade of ~5.5% lithia was presented for sale on the platform with delivery expected from 15 June 2022.

Unsurprisingly given the insatiable demand for lithium, the company revealed that strong interest was received in both participation and bidding by a broad range of buyers.

Pilbara Minerals advised that it intends to accept the highest bid of US$5,955 per dmt, which on a pro rata basis for lithia content (inclusive of freight costs) equates to a price of approximately USD$6,586 per dmt (SC6.0, CIF China basis).

Judging by the Pilbara Minerals share price performance today, some investors may have been betting on even stronger prices.

BMX lithium prices continue to rise

This winning bid of US$5,955 per dmt represents the fourth consecutive increase in prices on the BMX.

The inaugural BMX auction in June 2021 saw Pilbara Minerals receive US$1,250 per tonne. It then commanded US$2,240 per tonne in September, US$2,350 per tonne in October, and then US$5,650 per tonne last month.

It's unclear when the next BMX auction will take place, but all eyes will be on that one to see if this positive pricing trend continues.

In the meantime, these high prices bode well for ASX lithium shares already producing the white metal in vast quantities. These include Allkem Ltd (ASX: AKE), Mineral Resources Limited (ASX: MIN), and of course Pilbara Minerals.

Motley Fool contributor James Mickleboro has positions in Allkem Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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