Shares of Pilbara Minerals Ltd (PLS.AU) plunged 5.02% in Friday's trading session, following a bearish report from Citi on the lithium market. The significant drop comes as the investment bank lowered its rating on the Australian lithium producer, citing expectations of prolonged lower lithium prices.

Citi has revised its lithium price forecasts downward by 15%-20% for the next three years, marking the most substantial adjustment in its commodity price projections. The bank now anticipates spodumene prices to reach $600 per metric ton in the next quarter, down from its previous forecast of $700 per ton. This bearish outlook has led Citi to downgrade Pilbara Minerals from "buy" to "neutral," reflecting growing concerns about the company's near-term profitability.

The downgrade is part of a broader reassessment of the lithium sector, with Citi analysts stating, "We see prolonged lower-for-longer prices as needed to rebalance the market." This perspective suggests that lithium producers like Pilbara Minerals may face continued pressure on their stock prices until more substantial supply cuts are implemented or demand significantly increases. The market's reaction to this news underscores the challenges facing lithium producers in the current economic environment and the sensitivity of their stock prices to analyst forecasts.