Asian Lithium Shares Soar on CATL Output Adjustment

Asian lithium producer stocks experienced a significant surge following speculation about Contemporary Amperex Technology Co. (CATL) halting production at a key mine in Jiangxi, China. This move has quelled oversupply concerns and benefited major players in the sector.

Pilbara Minerals and Tianqi Lithium Share Price Jump

In Sydney, shares of Pilbara Minerals rose up to 17%, while Hong Kong saw a nearly 16% increase in Tianqi Lithium’s stock. According to UBS Group AG, who conducted channel checks with industry contacts, CATL decided to pause lithium lepidolite operations after a Tuesday meeting.

Impact on Lithium Carbonate Production and Prices

CATL’s decision will lead to an 8% reduction in China’s monthly lithium carbonate production. This reduction is expected to rebalance the current supply-demand equation, according to UBS analysts led by Sky Han. They forecast that lithium prices could increase by 11% to 23% through the remainder of 2024.

Challenges Faced by Lithium Producers

The lithium market has faced challenges with excess supply overwhelming demand in 2024. Companies like Pilbara Minerals were at a two-year low and others were compelled to shut down high-cost operations. Arcadium Lithium and Core Lithium are some of the affected producers, while Global Lithium Resources is cutting costs at its project.

Future Outlook for Lithium Market

Lithium prices might enter a positive cycle by 2026 as global supply tightens. Projects in Argentina are slowing down, and financial constraints are affecting expansions. Analysts from Guotai Junan Securities suggest that lithium stocks usually start appreciating months before a rise in commodity prices.

–Assistance by April Ma, John Cheng, Danny Lee, and Annie Lee.

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