China’s lithium prices hit eight-month high as battery maker CATL suspends mine

China's lithium futures and spot prices reached more than an eight-month high Aug. 11, breaching the daily trading limit, following the suspension of a CATL-owned mine.

The most active lithium carbonate contract on the Guangzhou Futures Exchange closed at Yuan 81,000/mt ($11,278/mt) Aug. 11, up 8% from the previous settled price and hitting the daily limit. The contract hit the highest level not seen since Nov. 22, 2024.

Elevated lithium production and overcapacity have crashed lithium prices by more than 80% since 2022.

Price mover

CATL, the world's largest batter maker, temporarily suspended operations at its Yichun project after its mining license expired Aug. 9, the company said on a Chinese investment platform.

The company is currently processing the license renewal application in compliance with relevant regulations and production at the Jianxiawo mine will resume as soon as the renewal is approved, CATL said. The mine's suspension is expected to have a minimal impact on the company's overall operations, it added.

Although CATL has not said how long the suspension could last, some China-based sources estimated the halt could stretch at least three months, which could impact domestic lithium chemicals supply to an extent.

CATL did not respond to a query for comments at the time of publishing.

CATL acquired the exploration rights of the Jianxiawo mine in April 2022 and launched the first phase with 10 million mt/year raw ore dressing capacity in the second half of 2023.

Physical markets

The physical lithium chemicals market also showed an uptrend, driven by the gain in the GFE futures contract. The GFE lithium futures contract is China's only listed contract.

Platts, part of S&P Global Energy, assessed battery-grade lithium carbonate at Yuan 80,000/mt Aug. 11 on a DDP China basis, up Yuan 8,000/mt day over day and 16,000/mt from a month ago. This was the highest level seen since Nov. 25, 2024, Platts data showed.

The anticipated supply contraction has buoyed markets to generate optimistic outlooks in the short term, sources said.

Multiple lithium mines in Jiangxi may face suspensions due to mining license approval procedures, potentially impacting domestic lithium carbonate output, according to sources.

Concurrently, the substantial tax rate increase for converting porcelain clay mines into lithium clay operations could significantly raise production costs under the new mineral resources law, which became effective July 1.

Combined with seasonally tighter supply-demand dynamics during the traditional peak season, this is creating multiple price catalysts for lithium carbonate.

However, some sources held different views on the current market fundamentals.

China's lithium carbonate output remains elevated, but CATL's halt at Jianxiawo may be counterbalanced by rising African and South American imports, as a price recovery could accelerate supply expansion from these regions, the sources noted.

Fundamentally, the lithium carbonate market remains in a surplus, with the demand-supply imbalance yet to be fully corrected, the sources said.

"It's quite interesting since CATL's mine production is nothing huge, but the impact is significant in the market," said a China-based consumer, adding that there is no change on the lithium chemicals demand side for now.

In recent weeks, market talk about whether key lithium producers halted operations at their mining sites has drawn significant attention, which has become one of the key factors driving volatility in China's lithium carbonate prices.

The suspension at the Jianxiawo mine stoked market concerns over whether other operations in the region could be impacted, according to sources.

Yichun's Natural Resources Bureau in mid-July issued an official directive flagging regulatory compliance issues at eight local mines, which primarily required these mining operators to submit supplementary materials for their reserve verification reports before Sept. 30.

Tibet Zangge Mining shut its lithium carbonate production in Haixi Prefecture of Qinghai province on July 17, as the local government required.