Contemporary Amperex Technology (SZSE:300750) has announced changes to lithium production at its Yichun mine, sparking optimism in the market. The changes, confirmed by the company, are expected to reduce China’s monthly lithium carbonate output by 8 percent. This development is significant, as the market has struggled with oversupply, which has negatively impacted prices over the last year.

The announcement on Wednesday led to an immediate reaction. Lithium futures and company shares saw notable increases. ASX-listed lithium stocks like Pilbara Minerals (ASX:PLS) and Liontown Resources (ASX:LTR) jumped significantly. Pilbara Minerals rose by up to 16 percent, while Liontown Resources experienced an 18 percent increase.

Additionally, Mineral Resources (ASX:MIN) and Core Lithium (ASX:CXO) witnessed considerable gains, with their shares rising by 21 percent and 12 percent, respectively. Core Lithium had previously reduced production due to falling prices, even suspending operations at the Grants open pit at its Finniss mine.

Catalyst for Price Upsurge

UBS analysts project that the production cut by CATL could give an 11 to 23 percent boost to lithium prices for the remainder of 2024. Although previous speculations about halts at the Yichun mine have proven inaccurate, this latest move appears credible.

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