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Highlights
- Pilbara Minerals shifts focus as short-selling interest declines.
- Uranium sector stocks Paladin Energy and Boss Energy now targeted.
- Lithium and uranium prices impact stock movements significantly.
The Australian Securities Exchange (ASX) witnessed a significant shift in short-selling activity, with Pilbara Minerals (ASX:PLS) relinquishing its title as the most shorted stock. This development follows the lithium producer’s removal from a widely followed index, prompting a focus shift toward the uranium sector, led by Paladin Energy (ASX:PDN).
Short interest in Pilbara Minerals fell from 17.7% to 11.6% after changes in the MSCI Australia Index, effective November 25. Previously, Pilbara had been among the most shorted companies in the ASX 200 index since late 2023, with short positions peaking at over 22%. The adjustment, which moved Pilbara from the MSCI Australia Index to the MSCI Australia Small Cap Index, forced hedge funds to adjust their short positions. This reallocation caused a liquidity event that impacted the stock’s performance.
The removal from the MSCI index triggered a 20% decline in Pilbara's share price between November 5 and November 25. However, the reduction in short-selling pressure has led to a modest recovery, with shares rebounding by 2.7% to $2.45 on November 27. Despite this, the stock remains down nearly 40% this year, largely due to declining lithium prices. Spodumene, a key lithium material, has seen prices fall from record highs of over $8,000 per tonne in 2022 to just $815 per tonne—a drop of nearly 90%.
This decline has caused ripple effects across the lithium sector, with producers like Mineral Resources (ASX:MIN) halting operations at sites such as Bald Hill, leading to workforce reductions. UBS forecasts suggest spodumene prices may stabilize, projecting $800 to $850 per tonne for the next two years.
Meanwhile, the uranium sector has taken the spotlight for short-sellers. Paladin Energy is now the most shorted stock on the ASX, with short interest climbing from 2.8% in June to 14.7%. Boss Energy (ASX:BOE) follows closely, with its short interest rising to 14.6%. Falling uranium prices, after breaking the $100 per pound mark earlier this year, have driven this trend. Paladin shares dropped over 20% after the company cut its 2025 production forecast, while Boss Energy shares have fallen by over 50% since May.
The shifts in short-selling focus highlight evolving market dynamics and underline the influence of commodity prices on ASX-listed stocks.
