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Highlights
- Share Price Decline: Pilbara Minerals' stock is set to end 2024 down approximately 45%, driven by plummeting lithium prices.
- Lithium Price Trends: Lithium spodumene 6% prices fell dramatically from an average of US$4,368 per tonne in 2022 to just US$790 per tonne in late 2024.
- Diverging Outlooks: Goldman Sachs predicts modest lithium price recovery, while Bell Potter anticipates a supply deficit that could boost prices as early as 2025.
The year 2024 has been a challenging one for Pilbara Minerals Ltd (ASX:PLS), with its share price on track to close the year approximately 45% lower. This significant decline stems from a continued slump in lithium prices, which have failed to recover and instead dropped even further into the red.
According to data from Goldman Sachs, the lithium spodumene 6% spot price fell to US$790 per tonne earlier this month. This marks a dramatic drop from its average price of US$4,368 per tonne in 2022 and US$3,712 per tonne in 2023.
With lithium prices showing no immediate signs of recovery, investors have lost confidence in the profitability of lithium miners. As a result, Pilbara Minerals shares have faced consistent selling pressure throughout the year.
Goldman Sachs vs. Bell Potter: Diverging Lithium Forecasts
Looking ahead, analysts are split on the future of the lithium market. Goldman Sachs forecasts only modest price recovery, predicting:
- US$800 per tonne in 2025
- US$978 per tonne in 2026
- US$1,155 per tonne in 2027
If these forecasts hold, the days of sky-high profitability for lithium miners like Pilbara Minerals may be behind us. Goldman's reputation for accuracy on lithium trends has further weighed on market sentiment, contributing to the stock's 2024 slump.
However, Bell Potter offers a more optimistic view. The broker believes the lithium market could head toward a supply deficit in 2026, potentially triggering a major lift in prices as early as 2025. Battery manufacturers scrambling to secure lithium supplies could provide a significant boost to miners like Pilbara Minerals.
2025: Hope on the Horizon?
In light of its bullish outlook, Bell Potter recently upgraded Pilbara Minerals' shares to a buy rating with a price target of $2.95. This implies a potential upside of 33% for investors over the next 12 months.
If lithium prices rebound earlier than Goldman Sachs anticipates, Pilbara Minerals could be well-positioned to capitalize on the growing demand for lithium in battery production. However, much depends on market dynamics and the accuracy of competing forecasts.
