Lithium-related shares rise on report China’s CATL may slash supply

Investing.com — Shares in lithium-related stocks jumped on Wednesday after analysts reported that Chinese electric vehicle battery maker Contemporary Amperex Technology is mulling a possible suspension to its massive lepidolite mine in eastern China.

In the report dated Sept. 11, analysts at UBS said the potential suspension by the company — better known as CATL — would reduce around 8%, or roughly 5,000-6,000 metric tons, of China’s monthly lithium carbonate equivalent (LCE) production.

“It’s not the first time for us to hear CATL to cut/suspend lithium production in Jiangxi. Although the previous news turned out to be speculation, we get higher conviction this time,” the analysts wrote.

In response to the report, CATL said it is planning to make adjustments to lithium carbonate production in the Chinese city of Yichun based on recent market conditions, according to Reuters.

Analysts at Citi said in a separate note that CATL is also weighing whether to halt operations at one of its three lithium carbonate production lines, the Wall Street Journal reported.

Lithium is seen as playing a key role in a broader green energy transition. The metal is used in the batteries powering EVs, although weak demand for the cars and an increase in new mines has dented its appeal. The unconfirmed reports that CATL is reining in output sparked hopes that the supply glut could soon be easing.

“CATL’s suspension of lithium operation in Jiangxi will […] help rebalance the supply with demand,” the UBS analysts said.

In Australia, shares in lithium miners Pilbara Minerals (ASX:PLS) and Mineral Resources (ASX:MIN) spiked. Elsewhere, US shares in Arcadium Lithium (NYSE:ALTM), Lithium Americas Corp (NYSE:LAC), Albemarle (NYSE:ALB), and Lithium Americas (NYSE:LAC) also jumped in premarket trading on Wall Street.

Reuters contributed to this report.