Why Is PLS Still Heavily Shorted?

Commodities | 11:17 AM

Persistent short positioning, even after a sharp rally, points to concerns about processing margins and where value is captured in the lithium market.

By Paul Githaiga

PLS Ltd ((PLS)), formerly known as Pilbara Minerals, has already seen the unwind of the obvious trade. 

From early 2025 lows near $3.75 to around $6.00 as of late April 2026, the stock has rallied strongly. Lithium prices have stabilised after a steep correction. Operational delivery has been cleaner, with expansion projects completed and cost guidance re-affirmed.

One data series has not followed that recovery. This is where the tension emerges:

The company is profitable, cashed up, and still arguably one of the best operators in the sector. Yet, the short sellers have not fully thrown in the towel.

According to the latest short position data as published by ASIC, PLS remains shorted at approximately 6.8% of issued capital. That is materially below the 15–18% levels observed through 2024, but still places the stock among the most shorted large-cap names on the ASX.

Technical data confirm the intensity of this positioning, with ‘Days to Cover’ estimated at roughly 7.4 days based on recent average trading volumes.

This volume-weighted exposure suggests any material positive catalyst could trigger a violent short squeeze, as exiting these positions would require over a week of average trading volume.

The key point is not the level alone. It is what has happened since.

For the latest ASIC data on short positions in Australia: 

https://fnarena.com/index.php/2026/04/30/the-short-report-30-apr-2026/

The First Proof: Shorts Have Not Covered Into a 60% Rally

Between early 2025 and April 2026:

• Share price: rallied by circa 60%

• Operational risk: reduced (projects completed)

• Market narrative: shifted from collapse to stabilisation

Under typical market dynamics, that combination forces short covering.

Instead:

Short interest has stabilised around 7% for months rather than trending toward zero.

That is observable behaviour — not interpretation.

It demonstrates:

• The original macro short (price collapse) has largely been reduced

• A residual position remains held through improving conditions

In market terms, that indicates:

A shift from cyclical positioning to structural conviction

The Second Proof: Positioning Held Through a Major Industry Shock

On February 13, 2026, Albemarle announced it would halt operations at its Kemerton lithium hydroxide facility in Western Australia.

In its official statement, CEO Kent Masters said:

“The recent lithium price improvement alone is not enough to offset challenges facing Western hard rock lithium conversion operations.”

This is a primary-source, attributable statement from one of the world’s largest lithium producers.

From a market perspective, this was a decisive signal:

• Not about demand

• About conversion economics outside China

What happened next matters.

ASIC short-position data for the February–March 2026 period shows no material reduction in short positioning in PLS following the Kemerton announcement, despite a material industry signal on conversion economics.

That creates a direct causal link:

• A real-world validation of processing challenges

• Followed by no short covering response

This is not inferred intent. It is an observable positioning behaviour aligned with a specific industry event.

The Third Proof: The Pattern Extends Beyond Lithium

The Kemerton outcome is not isolated.

Across 2025–2026, multiple Australian processing operations have faced similar pressure:

• Alcoa ((AAI)) curtailed refining operations at Kwinana

• BHP Group ((BHP)) exited its Kalgoorlie nickel smelter after 50 years of operation

• Simcoa reduced silicon production in February 2026, citing international competition

Each of these outcomes was:

• Announced publicly

• Attributed to cost competitiveness and global market pressure

The common factor is clear:

Processing assets in higher-cost jurisdictions are struggling to compete with lower-cost global supply chains.

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