PLS Group Ltd (ASX: PLS) shares have slumped to a fresh 52-week low in Tuesday lunchtime trade.
At the time of writing, the ASX 200 stock is down around 1% in Tuesday lunchtime trade, to $2.59 apiece.
PLS shares have now fallen 62% from an all-time closing high of $6.74 in early-June, and are also down 40% for the year-to-date.
Why has the ASX 200 stock hit a fresh low today?
There hasn't been any price-sensitive news out of the ASX lithium company today to explain this morning's sell-off.
It looks like the decline is mostly due to a sharp decline in lithium prices over the past week.
As a pure-play lithium producer, PLS Group is heavily tied to any fluctuation of the lithium prices.
Lithium prices spiked higher early last week but turned direction mid-week and started falling again, according to Trading Economics data.
Since last Wednesday, lithium carbonate prices in China have fallen around 7% to around CNY 93,000 per tonne at the time of writing. This is the lowest trading level since December 2025, and is 25% lower than one month ago.
The latest slump is mostly due to ongoing concerns about a demand-supply imbalance.
Trading Economics explains that the EU is set to cap imports of Chinese hybrid electric vehicles at 350,000 units per year, starting in 2027. The European Commission expects the move to halve China's market share and limit orders from battery manufacturers in the region after recent data showed higher-than-expected lithium inventories.
It also coincides with an increase in production from Australian producers.
Mineral Resources Ltd (ASX: MIN) has restarted its Bald Hill lithium mine following an 18-month suspension, with full capacity expected in the second quarter of FY27. Core Lithium Ltd (ASX: CXO) has also restarted its Finniss project, with the first commercial shipment of newly produced concentrate targeted for next month.
Here's why I think the ASX 200 stock is a bargain buy
Declining lithium prices and a market-wide supply and demand imbalance is a clear concern for investors
But I still see potential upside ahead for the ASX 200 stock.
The company has a strong balance sheet and good cash reserves, which can help the company remain resilient against commodity price downturns.
PLS Group reported FY26 revenue up 152% to $1.93 billion and a shift to a $526 million net profit. Its cash balance also jumped 135% to $2.29 billion.
Its operational performance is strong, too. The company restarted the Ngungaju processing plant and advanced key projects including P2000 and Colina, with $175 million in pre-investment approved for P2000 in June.
As part of its September 2026 quarterly activities report, PLS Group reported record production of 267.6kt and sales of 223.6kt (reflecting shipment timings) resulting in revenue of $563M, and a reduction in its unit operating costs, to US$539 per tonne, underpinned by operational efficiencies and a greater volume of capitalised waste.
It also confirmed a long-term agreement with Fortescue Ltd (ASX: FMG) last week to cut operating costs and move closer to net zero emissions. Looking ahead, PLS Group and Fortescue plan to work through approvals and design to commence power supply by 2029, with the aim of achieving net zero Scope 1 and 2 emissions by the 2040s.
I see the latest share price declines are mostly driven by spooked investors and market-wide headwinds, rather than company-specific data. When these headwinds taper, I think the ASX 200 stock could quickly rebound.
What's next for PLS Group shares?
Market Index data shows that the majority of brokers have a strong buy rating on PLS Group shares. The average $4.52 target price implies an upside of around 74% at the time of writing.
At just $2.59 apiece, the current trading price looks like a bargain buy.
The post This ASX 200 stock looks like a bargain buy after hitting a fresh 52-week low: Here's why appeared first on The Motley Fool Australia.
Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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