Eliza Wong
Lithium Market Reacts to CATL Mine Development
The lithium market experienced immediate price pressure as news emerged about CATL’s (300750.SZ) Jiuxiawo mining district potentially resuming operations sooner than expected. Shanghai Steel Union data showed battery-grade lithium carbonate prices dropped by 1,500 yuan today, with average prices settling at 72,000 yuan per ton. This development comes amid ongoing industry concerns about lithium carbonate oversupply throughout 2024 and into 2025.
The Jiuxiawo mining district in Yichun’s Fengxin County, where CATL has significant investments, ceased operations on August 9th due to expired mining permits. However, recent media reports suggest the company’s mining rights and permit applications are progressing smoothly through regulatory channels. According to insider information, CATL has internally tasked its licensing team with achieving production resumption by November this year, potentially ahead of market expectations.
When contacted by Caijing News, CATL officials declined to provide specific comments on the timeline. A senior executive from a leading industry chain company noted that fourth-quarter and next year’s supply-demand balance would ultimately depend on whether demand could provide sustained support, maintaining their outlook for lithium carbonate oversupply through 2025.
Market Impact of Production Disruptions
The Jiuxiawo mining district represents one of Yichun’s largest lepidolite lithium production facilities, making its operational status particularly significant for lithium carbonate futures and spot prices. When the initial suspension news emerged in August, lithium futures prices experienced volatility and approached 90,000 yuan per ton.
Industry analysis reveals that China’s lithium market currently maintains relative supply-demand balance. The Jiuxiawo suspension potentially reduces monthly domestic lithium supply by approximately 1,000 tons, representing less than 4% of domestic supply and under 1% of global supply. While the production impact appears limited quantitatively, the psychological effect on market expectations proves more substantial.
Price Support Levels and Market Psychology
Industry experts identify 78,000 yuan per ton as the full cost support level for lithium prices before October, with cash cost support at 68,000 yuan per ton. Market trading patterns suggest participants recognize the 78,000 yuan level as a key support point for spot prices. Futures markets have shown sideways movement between 78,000-79,000 yuan per ton after adjusting from the 90,000 yuan peak.
This price level aligns with regulatory guidance promoting “sales not below cost” and represents a critical juncture for determining whether lithium prices will continue upward or test lower support levels around 65,000-68,000 yuan per ton. The lithium carbonate oversupply situation continues influencing these price dynamics despite temporary production disruptions.
Broader Supply Landscape Considerations
While the Jiuxiawo suspension reduced Jiangxi’s lepidolite lithium production, other sources have compensated for this decrease. Spodumene production has expanded significantly, complemented by stable supplies from recycled materials and salt lake extraction. Surprisingly, domestic lithium carbonate production reached record monthly highs despite the mining suspension.
According to My Steel research data, China’s lithium carbonate production reached 82,800 tons in August 2025, increasing 8.1% month-over-month. September production schedules project further growth to 85,400 tons, representing a 3.3% monthly increase. This production growth reinforces the lithium carbonate oversupply perspective maintained by industry analysts.
Regulatory Changes and Industry Adaptation
Beyond CATL’s Jiuxiawo mine, industry attention focuses on other local mines facing similar regulatory clarification requirements regarding primary mineral classification changes. The Yichun Natural Resources Bureau announced in July that eight mining enterprises, including Yichun Times New Energy Mining Co., Ltd. (Jiuxiawo operator), Yichun Guoxuan Mining Co., Ltd., and Yichun Shengyuan Lithium Industry Co., Ltd., must submit mineral variety change reserve verification reports.
Analysts speaking with Caijing News indicated that if other Yichun mines fail to complete mineral variety changes by September 30th, second-half supply could decrease by 23,000 tons. Overall, potential supply impacts from Jiangxi mine suspensions could reach 68,000 tons, reducing monthly supply by 14,000-16,000 tons during the second half, approximately 13% of current domestic monthly supply.
Evolving Lithium Supply Structure
China’s lithium resource landscape has developed into a diversified supply pattern characterized by domestic production supplemented by international sources. The industry increasingly focuses on high-quality lithium resource development, encompassing not just resource grade and sustainability but also extraction technology advancement, cost control capabilities, green low-carbon standards, and downstream battery industry integration.
The lithium carbonate oversupply situation reflects this maturing market structure, where multiple supply sources create buffer capacity against individual production disruptions. While CATL’s Jiuxiawo mine resumption timeline attracts market attention, the broader supply context suggests limited long-term price impacts from single facility operations.
Global Context and Future Outlook
The global lithium market continues evolving with new production sources coming online across various continents. According to the International Energy Agency, lithium demand for electric vehicles and energy storage continues growing, but supply expansion appears keeping pace with this demand growth. The current lithium carbonate oversupply situation might persist through 2025 unless demand acceleration exceeds expectations.
Industry participants should monitor several key indicators beyond CATL’s mine resumption, including electric vehicle sales growth, energy storage deployment rates, and new production facility commissioning timelines. These factors will ultimately determine whether the current lithium carbonate oversupply persists or transitions toward balance.
Strategic Considerations for Market Participants
For investors and industry participants, understanding the dynamics behind lithium price movements requires analyzing both fundamental supply-demand factors and market sentiment influences. The Jiuxiawo situation demonstrates how production news can impact prices even when the quantitative supply effect remains relatively modest compared to total market size.
Companies throughout the lithium battery value chain should maintain flexible procurement strategies that account for potential price volatility while recognizing the underlying lithium carbonate oversupply trend. Developing long-term partnerships with reliable suppliers and diversifying sourcing options can help mitigate short-term market disruptions.
The current market environment favors battery manufacturers and electric vehicle producers through potentially lower input costs, though these benefits might be partially offset by competitive pressures passing savings to consumers. The lithium carbonate oversupply situation creates opportunities for downstream players to secure favorable supply agreements.
Navigating the Evolving Lithium Landscape
The lithium market continues demonstrating its dynamic nature, responding to operational developments like CATL’s Jiuxiawo mine situation while following broader supply-demand trends. While temporary production disruptions can cause price volatility, the underlying market condition suggests adequate supply availability through multiple sources.
Industry participants should maintain perspective on the lithium carbonate oversupply situation while monitoring individual developments that might affect short-term pricing. The market’s ability to compensate for production interruptions through alternative sources demonstrates the increasing maturity and resilience of lithium supply chains.
As the clean energy transition accelerates, lithium will remain a critical material supporting electrification across transportation and energy storage applications. Market participants should focus on developing robust strategies that account for both current market conditions and long-term growth prospects, recognizing that periods of oversupply and tightness will likely alternate as the industry continues evolving.
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