CATL (300750) has taken a major step by shutting down its lithium mine in Jiangxi, China, following a drastic decline in lithium prices. This move marks a key moment for the global lithium market, highlighting the financial struggles faced by even integrated companies.

CATL Shuts Down Major Lithium Mine

CATL’s decision to close the Jiangxi mine, which contributes around 5% to the global lithium supply, is significant. Despite high lithium reserves, rising production costs and falling prices made the mine unsustainable. BMO analysts state lepidolite mining, despite its high lithium content, is costly to convert, causing financial strain.

UBS Analysis on Global Impact

UBS analyst Sky Han notes the mine’s closure affects 5% of the global and 20% of China’s lithium supply. Initially expected to increase production, the mine’s shutdown adds to market uncertainty. While this is significant, the 2025 market surplus remains unaffected unless other producers follow CATL’s lead.

Future Lithium Price Trends

The suspension reduces China’s lithium carbonate output by 8%. UBS analysts predict stabilized prices between $10,000 and $11,000 per ton. Conversion costs could also drive spodumene prices higher, providing some relief to struggling producers. Continued supply reductions are crucial to address the future market surplus.

CATL’s decision has unexpectedly driven a stock surge in the lithium market. Shares of global lithium companies, including Albemarle and SQM, witnessed gains following the closure announcement. This shift eases oversupply concerns and could lead to a price stabilization.

Despite current challenges, analysts like Alice Yu from S&P Global Commodity Insights recognize CATL’s significant impact on signaling prolonged downstream demand weakness. The evolving lithium market dynamics suggest possible strategic shifts for integrated producers like CATL.

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