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Why PLS Rally Masks a Lithium Market Still in Surplus
Pilbara Minerals climbed 26% in 2025, but the lithium market is still in surplus. The stock's next test: whether Chinese restocking cuts inventory in March.
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Pilbara Minerals (ASX:PLS) has climbed 26% since the start of 2025. The rally masks a commodity market that remains in surplus. Lithium carbonate prices have stayed below the all-in cost for most new producers. Inventory at Chinese converters is at multi-month highs, according to industry data.
Pilbara, as one of the lowest-cost spodumene miners globally, has weathered the downturn better than peers. Its cash cost of about $400 per tonne of spodumene concentrate leaves a margin even at current spot prices of $800-$900 per tonne. Higher-cost operations in Africa and Brazil are losing money at those levels.
The valuation question for PLS in 2026 turns on whether the lithium market rebalances. Supply cuts announced by Arcadium Lithium and Core Lithium last year have not yet shown up in visible inventories. Pilbara’s own production guidance for fiscal 2026 is around 700,000 tonnes of spodumene, flat year-on-year. The company is banking on demand growth from Chinese battery makers restocking ahead of spring production. That restocking has been slow to materialize, with lithium hydroxide output still below its five-year average.