Lithium Market Rebounds, Pilbara Minerals (ASX:PLS) at 52-week High, What’s Next?

Pilbara Minerals Limited (ASX:PLS) has witnessed a strong rally in the recent past, tripling in value as compared to the same time last year. The stock has been under a sentiment gush for some time over a strong rebound in lithium prices in the wake of increasing demand from the battery segment.

Image Source: © Kalkine Group 2021

Record Quarterly Shipment Unfolds

The recent December quarter shipments figures unveiled by the Company have been another sentiment booster for the PLS with its stock further gaining ground to $ 1.095 (intraday high on 7 January 2020).

During the December 2020 quarter, the Company had shipped 70,609 dry metric tonnes of spodumene concentrate from its Pilgangoora lithium project, exceeding the upper range of the sales guidance of 55,000 to 70,000 dry metric tonnes for the same period.

The shipment for the December 2020 quarter remained 38 per cent higher as compared to the previous quarter and surpassed the previous record of 46,682 dry metric tonnes set by the miner in the December 2018 quarter.

Commenting on the matter, CEO Ken Brinsden cited that the increased shipment was primarily due to the increasing customer demand and an upward trend evident in the price for lithium chemicals in China. Also, Mr Brinsden mentioned that the lithium raw material market is showing some signs of recovery.

The strong rebound in the lithium market across China along with the Company’s ability to reduce the operating cost while increasing production seems to be uplifting the market sentiment, keeping the stock buoyant.

PLS on Charts

PLS Daily Chart (Source: Refinitiv Eikon Thomson Reuter)

On following the daily chart, it could be seen that the stock has given a volatility breakout in the previous trading session with prices crossing the +2 Standard Deviation of the 20-day simple Bollinger Band®. The ability of the stock to sustain the current breakout would further dictate the market sentiment ahead.

  • Also, the stock has been under an accelerated trend, and the primary support for PLS would be at the mean value of the Bollinger Band®, which is currently overlapping with the upward sloping short-term trendline.
  • The major support for the stock is at the -2 Standard Deviation, which is currently overlapping with the 50-day exponential moving average.
  • Furthermore, at present, the plus DI is trading above the minus DI, suggesting that the volatility over the past 14-day has been more towards the upside, which could be confirmed from the price action as well.
  • The ADX is sloping upwards while the plus DI is above minus DI, reflecting that the stock is currently trending.

 

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