Foreign Media: China Raises Lithium Prices

Western media has repeatedly accused China of using its monopolistic position in multiple industries to pressure partners. However, practice shows that the market often panics and overreacts to individual events. Lithium prices are an example.

According to Bloomberg, lithium prices surged sharply on Monday after China's battery giant Contemporary Amperex Technology Co., Ltd. (CATL) suspended operations at a large mine in China. This sparked speculation that the Chinese government may further halt other projects in the fight against economic overcapacity. Shares of Hong Kong's Tianqi Lithium Corporation soared 19%, and Ganzhou Ganfeng Lithium Group Co., Ltd. shares jumped 21% after CATL officially confirmed the closure of a mine in Jiangxi Province, causing a significant increase in the stock price of Australian mining companies. The lithium price at the Guangzhou Futures Exchange was locked at the upper limit and remained so throughout the day.

The CATL lithium mine is the largest lithium mine in China's "Lithium Industry Center" Yichun. For weeks, it has been under scrutiny due to rumors of "non-renewal of licenses." The mine accounts for about 6% of global lithium production, and the output of other mines in the region accounts for at least 5% of global production.

Lithium producers are facing a global supply surplus, and a decline in electric vehicle demand, along with factors such as the Trump administration canceling subsidies for the industry in the United States, have further worsened the situation. In China, a political campaign targeting unfair competition and overcapacity has led to speculation about possible increased control over clearly overcapacity industries.

Like many Chinese battery companies, CATL ensures long-term supply and reduces costs by investing in lithium, nickel, and cobalt mining projects. This vertical integration has helped China become a leader in the global electric vehicle market.

Bloomberg analysis points out that CATL's situation has not changed the market's surplus scenario. However, if other mines in Yichun also shut down after September 30, lithium prices may rise further.

Original: www.toutiao.com/article/1840180744243529/

Statement: This article represents the views of the author himself.