Why Are The Pilbara Minerals (PLS) And Liontown (LTR) Share Prices Rebounding?

How Did Asx Lithium Stocks React To Pilbara Minerals Extraordinary Auction Result Stockhead

Lithium Explorers shares have become a market darling over the past few months, so it's not surprising that stocks in the sector received more attention on Tuesday.

In early trade, the steadfast Pilbara Minerals (ASX:PLS) is up more than 6% to a fresh high of $3.93, while smaller peers Liontown Resources (ASX:LTR) and Core Lithium (ASX:CXO) are up 5 % gained.

Why Are Lithium Mining Stocks in the Spotlight Today?

One of the main reasons behind the recent rally in lithium stocks traded on the ASX is the growing expectation that prices will continue to rise amid a potential supply shortage of battery materials, even as demand for electric vehicles continues to grow at a rapid pace.

Brokerage firms are now translating these improved forecasts into hard numbers, and it looks like this is having a major impact on lithium producer reports and stock prices.

Analysts at JP Morgan expect lithium prices to rise this week as an attempt is made to close the gap between supply and demand.

They predict the market will experience a supply shortage through at least 2025, which will cause lithium carbonate and spodumene price targets to increase by 20% and 25%, respectively.

Confirming these market dynamics, Jeffries said the limited supply will remain in the market through 2025. The broker increased its price targets on IGO (ASX:IGO), Allkem (ASX:AKE) and Pilbara Minerals.

According to Jefferies analyst Mitch Ryan, prices in the market will remain elevated through the end of the year with "all current producers benefiting from the current cyclical recovery".

growth projects

Analysts at Macquarie raised their price forecast for spodumene last month after data showed global electric vehicle (EV) sales rose more than 50% between January and July this year.

Analysts at UBS were also bullish on battery metals, raising their long-term lithium price forecasts by 10% to 38% as demand for the white metal rises with a boom in lithium production.

Pilbara last month reported first net income of $561.8 million after what CEO Dale Henderson described as an "outstanding year."

The Perth-based miner underlines its strong growth plans and forecasts a significant increase in spodumene production to 540,000 to 580,000 dry matter tonnes for the current fiscal year. It is also investing approximately $297.5 million to expand production capacity at Pilgagoora, the world's largest independent solid-state lithium company.

Similarly, junior explorer Core said development at its flagship Finiss project in the Northern Territory is continuing despite headwinds, with the project expected to send its first lithium export to the country by the end of this fiscal year.

Core Lithium has signed a deal to supply spodumene to electric car giant Tesla, while rivals Liontown and Ioneer will supply the battery component to global automaker Ford Motor Co.

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