Lithium Drops to Near 1-Month Low

Lithium carbonate prices in China fell to CNY 147,000 per tonne in September, the lowest in nearly one month, as the outlook of higher production in Australia offset supply uncertainty in China. Industry players reiterated the outlook of ample supply from major producers to maintain the ongoing supply surplus through the next decade. These were led by Australian lithium producers, with Mineral Resources restarting its Bald Hill lithium mine following an 18-month suspension, while Core Lithium restarted its Finniss project. A sharper pullback was prevented by more disruption in CATL's Jianxiawo mine, China's largest by capacity and responsible for 4% of global supply. Chinese authorities revoked their environmental approvals for the mine to extend the period of permit hurdles for over one year, coinciding with Beijing's anti-involution campaign and efforts to combat producer overcapacity.

Lithium prices in China rose to over CNY 150,000 per tonne in August, the highest in one month, as signs of growing demand offset the recent respite to supply. Chinese efforts at electrification of its economy drove local governments to pile on projects to develop electricity storage infrastructure in tandem with renewable power generation sources. Such projects were recently headlined by the Medog Hydropower Station and Beijing's announcement that it would double national EV charging capacity to 180 gigawatts by 2027. In turn, industry players highlighted uncertainty in the pace of operations to be restarted by CATL's Jianxiawo mine. Activity in the major lithium source was suspended last year as Beijing refrained from renewing its license, aligned with policymakers' efforts to combat producer deflation. Limiting the rebound, Mineral Resources will restart its Australian Bald Hill lithium mine following an 18-month suspension, while Core Lithium restarted its Finniss project.

Lithium carbonate prices fell to CNY 140,000 in August, their lowest in nearly six months, as downside consumption risks combined with higher global supply. China said it would end tax exemptions for lithium-ion batteries to rein in a race to the bottom between manufacturers. Industry reports in China indicated that competition between EV battery producers to retain market share drove companies to increase their production schedules, leading to higher lithium sourcing before the announcement. In turn, CATL's Jianxiawo mine, among the largest in the world, cleared security permits to restore activity following its prolonged suspension. On top of that, higher lithium prices since the start of the year drove Australian miners to restore operations. Mineral Resources will restart its Bald Hill lithium mine following an 18-month suspension, while Core Lithium restarted its Finniss project, making up for shortages elsewhere.