The Pilbara Minerals Ltd (ASX: PLS) share price has given back its morning gains and dropped deep into the red.
In afternoon trade, the lithium miner's shares are down 5.5% to $4.59.
Why is the Pilbara Minerals share price falling?
This morning the Pilbara Minerals share price was charging higher in response to news that the lithium miner will be added to the ASX 50 index at the next rebalance.
However, it has now given back those gains and more this afternoon after investors suddenly hit the sell button en masse.
Pilbara Minerals isn't alone in trading in the red today. There are a number of other ASX lithium shares trading notably lower on Monday along with it. For example, the Allkem Ltd (ASX: AKE) share price is down almost 2%, the Core Lithium Ltd (ASX: CXO) share price is down 4%, and the Liontown Resources Ltd (ASX: LTR) share price is down 2%.
What's going on?
It remains unclear why the Pilbara Minerals share price has come under pressure this afternoon.
Though, it is worth noting that this weekend there were reports of new lithium mines coming into operation in the near future.
According to the Financial Times, Sigma Lithium has announced that it will start commissioning the Grota do Cirilo project in Minas Gerais state this month and aims to be shipping lithium by the end of April.
After which, by 2024 it plans to almost triple its targeted annual output to approximately 100,000 tonnes of lithium carbonate equivalent (LCE). This will make it a top four global producer.
It's possible that some investors believe this increase in supply could put downward pressure on lithium prices. However, you could argue that given how strong demand is, this increased supply would likely be gobbled up very quickly by end users.
In light of this, investors may want to stay tuned for the next BMX auction from Pilbara Minerals to see how lithium prices are faring at present. One could be coming very soon based on when previous auctions were held.
