Australian lithium stocks rallied on Monday on speculation that Chinese battery maker CATL had closed its Jianxiawo mine in China that produces the material used in electric vehicle batteries.
Shares of Australia’s biggest pure play lithium miner Pilbara Minerals rallied as much as 4.9% and Liontown Resources surged 7.7%, amid an upbeat tone in Australian resources companies.
Jianxiawo produces lepidolite, which is a high-cost form of lithium.
CATL did not immediately respond to a Reuters request for comment.
“CATL are apparently reluctant to continue production below 95,000RMB/t (~US$13,000/t) for lithium carbonate,” Barrenjoey said in comments on Friday.
That mine, which would provide 3% of global supply, would move the market from a 1% surplus to a 2% deficit of around 20,000 for 2024, it said.
In Australia on Monday, developers saw outsize gains, with Patriot Battery Metals as high as 6%, Wildcat Resources up 5.8%, and Sayona Mining up 7.7%.
Pilbara Minerals is Australia’s most heavily shorted stock, given investors have viewed it as a proxy for a slowdown in electric vehicle demand.
Lachlan Shaw, analyst at UBS, said it was not uncommon for facilities in China to shut or slow during Chinese New Year holidays.
“If confirmed that Jianxiawo has shut, and that the shut is on economic grounds rather than temporarily for Chinese New Year, it’s an important step in the necessary market rebalancing that we are looking for,” said Melbourne-based Shaw.
“A key question is why the world’s biggest battery manufacturer who is growing quickly would shut their fully integrated lithium mine when lithium prices are around UBS’ understanding of break even levels.”
