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Pilbara Minerals Share Price Guide: Pilbara Stock Trading

Date Modified: 6/10/2024

Lithium has rapidly become one of the most sought-after minerals in the world, contributing to the global shift towards electric vehicles (EVs) and renewable energy.

Pilbara Minerals (PLS.CHA) stands at the forefront of this industry with its robust business model centred on lithium production. By owning and operating the Pilgangoora Project, one of the world's largest hard-rock lithium operations, Pilbara Minerals plays a critical role in meeting the growing demand for this essential resource.

This article explores Pilbara Minerals' business model, market position, and the key factors influencing its stock price. Understanding these elements is crucial for traders looking to gain exposure to opportunities within the lithium market and navigate the complexities of trading PLS.CHA stock.

An image of mineral mining trucks.

TL;DR

  • Pilbara Minerals (PLS.CHA) is a leading lithium producer listed on the Australian Securities Exchange (ASX).
  • The company's Pilgangoora Project is one of the world's largest hard-rock lithium operations.
  • CFDs allow traders to speculate on Pilbara Minerals' share price, offering opportunities from rising and falling markets.

Pilbara Minerals: Business Model and Market Position

Pilbara Minerals is a leading lithium mining company holding 100% ownership of the Pilgangoora Project located in the resource-rich Pilbara region of Western Australia.

Established in 2005 and listed on the Australian Securities Exchange (ASX) under the ticker PLS, the company primarily produces spodumene and tantalite concentrates, which are crucial for the lithium-ion battery industry.

In the competitive landscape, Pilbara Minerals faces significant competition from global lithium giants such as Albemarle Corporation (ALB), Sociedad Química y Minera de Chile (SQM), and Ganfeng Lithium Co., Ltd. (002460.SZ). Like Pilbara, these companies are heavily invested in lithium production and play a crucial role in the global supply chain.

With two processing plants—Pilgan and Ngungaju—Pilbara Minerals was responsible for approximately 8% of the world’s lithium supply (as of 2023).

The company’s business model revolves around mining and exporting spodumene concentrate, a key input for lithium chemicals used in EVs, energy storage, and various electronic devices.

In 2021, Pilbara Minerals strategically expanded its operations by acquiring Altura Lithium Operations and restarting the Ngungaju plant. The same year, it finalised a joint venture with Pohang Iron and Steel Company (POSCO) to develop a lithium chemical conversion facility in South Korea.

Financially, Pilbara Minerals has seen growth, with sales revenue reaching nearly AUD 4.06 billion in 2023 and gross profit surging to AUD 3.28 billion, positively impacting the Pilbara Minerals share price and reflecting the booming global demand for lithium. However, past performance does not indicate future results.

In June 2024, the company laid out an AUD 1.2 billion plan to double its lithium output at Pilgangoora.

How to Trade Pilbara Share CFDs

Contracts for Difference (CFDs) offer traders a way to speculate on Pilbara Minerals' (PLS.CHA) stock price without owning the actual shares. CFDs allow traders to trade both rising and falling stock prices, making them ideal for reacting to factors like quarterly earnings reports, lithium market fluctuations, or strategic developments within the company.

For example, if you anticipate Pilbara Minerals' share price will rise due to solid revenue reports, you could open a long position with CFDs. Conversely, if you expect a decline, you could go short. CFDs also enable leveraged trading, which allows traders to gain larger exposure to an underlying instrument with less capital. However, while leverage can amplify potential profits, it also increases the risk of significant losses, making it crucial for investors to employ careful risk management strategies and understand these prior to trading.

What Moves Pilbara Minerals’ Share Price?

Pilbara Minerals’ share price is influenced by various factors, from global market dynamics to the company’s strategic initiatives and financial performance.

Market and Economic Conditions

Global Demand for Lithium

Global demand for lithium plays a crucial role in Pilbara Minerals' stock price by impacting lithium pricing. In 2023, a sharp drop in lithium prices, driven by slower EV sales in China and an oversupply of lithium carbonate, led to a decline in Pilbara Minerals’ stock price.

While oversupply can negatively affect PLS.CHA shares by reducing profits, the ongoing global need for lithium, especially in the EV and clean energy markets, presents opportunities for price recovery and stock growth as demand eventually outpaces supply. This cyclical behaviour suggests that while short-term challenges exist, long-term prospects for traders may remain strong.

Global Economic and Geopolitical Events

Global economic and geopolitical events can significantly influence Pilbara Minerals' stock price. These events impact lithium supply and demand, directly affecting the mining industry. In 2023, falling commodity prices and rising costs pressured the global mining sector, reducing revenues and profits, which could negatively impact Pilbara Minerals' stock.

Geopolitical disruptions, such as the Russian invasion of Ukraine in 2022, have increased volatility in commodity prices, including lithium. This volatility can positively or negatively impact PLS.CHA stock, depending on how these events affect the availability and cost of key materials. Traders must be aware global factors such as these have the potential to significantly affect performance.

Company Operations and Strategic Decisions

Expansion and Development Plans

Expansion and development plans issued by Pilbara Minerals may also influence its stock price by projecting its growth potential. For example, Pilbara's plan to double lithium production at Pilgangoora to over two million metric tonnes per year could boost PLS.CHA stock by signalling strong future growth.

However, the AUD 1.2 billion required for this expansion can also introduce a number of financial risks that could negatively affect the stock’s price should funding or market conditions falter. While these plans may offer growth opportunities, they also carry risks that traders must consider.

Strategic Partnerships

Strategic partnerships can significantly influence Pilbara Minerals' stock by enabling market expansion and operational diversification. The joint venture with POSCO, officially opened in November 2023 to establish a lithium hydroxide facility in South Korea, highlights Pilbara's move into downstream processing, which can boost PLS.CHA stock by enhancing revenue streams.

However, these partnerships also carry risks. Delays or underperformance in these ventures could negatively impact the stock, as could dependence on partners if market conditions shift.

Financial Performance

Revenue and earnings reports play a crucial role in Pilbara Minerals' stock price. In 2022, Pilbara reported its first annual profit of AUD 561.8 million, driven by strong lithium demand and prices. Positive results like these can boost PLS.CHA stock by signalling growth and profitability to traders.

However, if reports show declining profits or missed targets, the stock could drop as traders lose confidence. Consistent strong performance may keep momentum, while negative surprises can lead to a decline in value.

PLS.CHA Trading Hours

Pilbara Minerals trades on the Australian Securities Exchange. Normal trading hours on the ASX are from 10:00 am to 4:00 pm Australian Eastern Standard Time (AEST).

The majority of trades occur during these standard trading hours.
However, it's important to note that trading hours on platforms like Plus500 may differ from the ASX's standard trading hours.

Conclusion: Understanding PLS.CHA Stock Trading

Pilbara Minerals' business model, which focuses on lithium production, positions the company as a key player in the global supply chain, particularly as demand for lithium grows in the electric vehicle and clean energy sectors. Its strategic expansions, partnerships, and strong financial performance are pivotal factors that traders should consider when analysing PLS.CHA stock.

Understanding the various influences on Pilbara Minerals’ share price, from global lithium demand to strategic business decisions, is essential for making informed trading decisions. By keeping a close eye on these factors, traders can better navigate the opportunities and risks associated with trading Pilbara stock.

If you’re interested in Pilbara CFD trading, you can start trading PLS.CHA CFDs with Plus500.

FAQs

Pilbara Minerals focuses on lithium production. It operates the Pilgangoora Project in Western Australia, one of the largest hard-rock lithium operations globally.

Lithium is the lightest metal and a critical element used primarily in lithium-ion batteries, which power a wide range of devices, from smartphones to electric vehicles. This versatile metal is crucial for technological advancements, particularly in energy storage solutions.

Global demand for lithium can significantly influence Pilbara Minerals' share price by impacting lithium pricing. High demand can boost the stock, while oversupply and price drops may negatively affect it.

Traders can use contracts for difference (CFDs) to speculate on Pilbara Minerals' share price, trading both rising and falling prices without owning the actual shares.

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