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the lithium mine in yichun, jiangxi province, stopped production, which in turn led to a surge in lithium stocks during the trading session. in response to the market fluctuations, catl (300750.sz) confirmed the news.

on the afternoon of september 11, catl responded to china business news that based on the recent lithium carbonate market conditions, the company plans to adjust its lithium carbonate production arrangements in yichun.

as of the close of the day, catl closed up 2.98%, tianqi lithium (002466.sz) rose more than 14%, ganfeng lithium (002460.sz) all hit the daily limit; shengxin lithium (002240.sz) and byd (002594.sz) rose more than 5% and 3% respectively, and the main contract of lithium carbonate futures 2411 of the guangzhou futures exchange also rose sharply during the session, and rose 7.9% to 78,450 yuan/ton by the close. not long ago, the contract fell below the 70,000 yuan/ton mark.

industry insiders told caixin that the spot price of lithium carbonate continued to fall, and some non-integrated lithium companies were forced to cut production due to cost inversion. the lack of self-owned mineral supply and high-cost production capacity in the industrial chain will face greater risks of liquidation, and the industry structure will be reshaped.

catl's jiangxi lithium mine halts production, impact remains to be seen

before catl confirmed the suspension of production at its yichun lithium mine, ubs said in a report that catl had limited output at its jiangxi factory because the company's lithium mine costs were higher than the market price of lithium salts.

the above research report stated that the cash cost of lithium carbonate mined by catl is us$10,968/ton (excluding tax), or rmb 89,000/ton (including tax). in this regard, ubs group told the reporter of china business news that it did send an english version of the research report on the production restrictions of catl's jiangxi factory to institutional investors.

when asked about the output of the discontinued lithium mine, catl did not respond to the reporter from china business network.

public data shows that the average grade of the raw ore in jiangxi yichun jianxiawo mine, which has been shut down, is 0.27%, and 300 tons of raw ore are needed to produce one ton of lithium carbonate. according to calculations by relevant agencies, catl's cash cost at the mine is around 100,000 yuan per ton.

it is still unknown whether catl's decision to reduce production will lead to a concentrated reduction in production by other companies in the industry. on the afternoon of september 11, jiangxi jiuling lithium industry co., ltd. issued a notice of suspension of production for maintenance, announcing that its holding subsidiary jiangxi chunyou lithium industry co., ltd. (mine) and its wholly-owned subsidiary yifeng jiuyu lithium industry co., ltd. (ore dressing plant) will be suspended for maintenance for 15 days and 10 days respectively. this news has further intensified the market's attention to the future trend of the lithium mining industry.

industry insiders told caixin that as the cost of lithium ore continues to rise, how to balance production costs and market prices has become a major challenge facing the lithium mining industry. catl's decision may trigger corresponding adjustments by other companies in the industry, thereby affecting the supply and demand pattern of the entire lithium mining market. the market will also pay close attention to the dynamics of catl and the entire lithium mining industry to assess the impact of this suspension of production on the long-term development of the industry.

can lithium prices bottom out and rebound?

on september 6, the main contract of lithium carbonate futures fell below 70,000 yuan/ton during the trading session, hitting a new low since its listing. in the spot market, the price of changjiang comprehensive battery grade lithium carbonate 99.5% on the same day was 63,900-75,500 yuan/ton, with an average price of 69,700 yuan/ton.

the price line of 70,000 yuan is not only the lower limit of the price fluctuation range expected by the industry at the beginning of the year, but it may also aggravate the losses of lithium ore extraction companies and trigger large-scale production cuts. judging from the production data in august, the trend of production cuts on the supply side of the industry has already emerged.

according to smm statistics, the total output of lithium carbonate from spodumene decreased by 7% month-on-month. although the total output of lithium carbonate remained high, it decreased by 6% month-on-month. jianxin futures analyzed that although lithium salt plants are facing losses, the oversupply situation has not been significantly alleviated. the price of lithium carbonate is expected to continue to fluctuate in the short term, and the market game is still ongoing.

in the downward cycle of lithium prices, the performance of listed companies in the lithium carbonate industry chain is generally under pressure. the price of lithium carbonate has fallen from 500,000 yuan/ton at the beginning of 2023 to about 70,000 yuan/ton at one point, and the adverse effects of inventory impairment of related listed companies have gradually emerged.

in the first half of this year, among the 19 sample companies included in the wind lithium mining sector, 14 companies made profits and 5 suffered losses. overall, the 19 companies had a total revenue of 82.649 billion yuan in the first half of the year, a year-on-year decrease of 32.52%; the total net profit was 2.723 billion yuan, a year-on-year decrease of more than 90%.

guotai junan believes that the release of new lithium carbonate project capacity has been delayed, and the lithium sector is expected to enter an upward cycle as early as 2026. overall, the current supply side has shown signs of contraction, and the capital expenditure of the lithium mining industry has declined significantly, which is expected to suppress the new supply in the next 2 to 3 years.