China's lithium market tumbles on CATL mine restart talks

China's lithium carbonate futures and the physical market came under pressure Sept. 10 after talks indicated the country's largest battery maker CATL could resume production at its Jianxiawo mine earlier than expected.

CATL did not immediately respond to Platts, part of S&P Global Energy, request for comments.

The most active lithium carbonate contract on China's Guangzhou Futures Exchange closed at Yuan 70,800 ($9,942)/mt on Sept. 10, falling 4.8% from the previous close, exchange data showed.

The Chinese lithium carbonate market could face more price volatility in September, but robust downstream demand is expected to keep wide fluctuations, several China-based market sources said.

The market is also awaiting a Sept. 30 deadline that calls for other mine operators in Jiangxi to submit necessary reports to verify their mineral reserves.

Several China-based market observers said these mines are unlikely to suspend operations and any halt would be brief, resulting in minimal impact on supply.

Production from spodumene- and brine-based lithium producers is rising, which is expected to offset the output decline from lepidolite producers, sources said.

Recent talks about production disruption at Jianxiawo are unlikely to significantly impact China's fundamental market conditions, said a China-based trader, adding that overcapacity in the industry has persisted.

China's lithium futures market surged Aug. 11 after CATL suspended operations at its Jianxiawo mine.

Physical market

Chinese domestic lithium carbonate spot prices also declined Sept. 10, reflecting volatility in the futures market.

Platts assessed battery-grade lithium carbonate at Yuan 71,200/mt Sept. 10 on a DDP China basis, down Yuan 1,700/mt day over day and 7,100/mt from a month ago. This was the lowest level seen since Aug. 8, Platts data showed.

"Demand has been healthy, with downstream restocking, whether for actual spot demand or advance purchases," a second China-based trader said.

However, the market has been wary of recent developments.

"Even though CATL had a meeting [to move forward preparations for restarting operations at the Jianxiawo mine], I think at least three months is normal [for resuming production]," said a third China-based trader.

CATL is yet to receive a mining license for Jianxiawo, added a China-based consumer.