FX.co ★ Lithium Surges Further to 1-Year High

In August, lithium carbonate prices climbed sharply to approximately CNY 85,000 per tonne, reversing the year's previous decline and reaching their highest level in a year. This upward trend can be attributed to decreased output from major mining operations, which has alleviated concerns about oversupply. The Chinese government has committed to reducing capacity in key industries affected by deflationary pressures in recent years, prompting investors to anticipate a diminished lithium supply from China, the leading producer of refined lithium. Speculation about potential changes to mining policies intensified after CATL, the world's largest battery manufacturer, halted operations at its Jianxiawo mine following its inability to renew a crucial mining permit. This mine accounts for roughly 5% of the global lithium supply. Last year, global production increased by 35%, driven by strong outputs from China, Indonesia, and DR Congo. Despite this growth, major producers are expected to continue expanding production this year, as miners are reluctant to close operations voluntarily to maintain market share and foster strong relationships with governments and battery manufacturers.