Lithium Price Drops 6% as Mine Restart News Triggers Heavy Selling

Battery-grade lithium carbonate spot prices fell 6.13% to about 157,000 yuan ($21,728) a tonne, according to data supplied by market researcher Juan Carlos Zuleta. China’s most-traded futures contract fell less sharply, by 2.38%, to settle near 161,740 yuan.

That price divergence suggests the market for immediate physical material bore the brunt of the selling pressure on Monday, whereas future contracts began factoring in a likely rebound.

Mine Restart Reports Trigger Lithium Sell-Off

Selling amplified throughout the day after news circulated regarding the potential restart of CATL’s Jianxiawo lithium mine in China and of the Bald Hill mine in Australia.

Mysteel reported that speculation around CATL’s mine fueled expectations of increased domestic supply. China’s biggest battery maker had been expected to restart its Jianxiawo operation, which reportedly obtained new land use rights extending to 2029.

News that Australian producer Global Advanced Metals said it hoped to resume output from the Bald Hill mine next month, as discussed earlier by this publication, provided another supply signal.

Buyers later stepped in to prop up the futures contract as traders digested the implications. Zuleta called the sell-off an overreaction to the restart information and said that spot prices bore the steepest downward adjustment, whereas futures remained much closer to the 160,000 yuan level.

Futures Recover From Intraday Low

The lead contract, which had opened near 157,220 yuan and hit an intraday low of 150,860 yuan, found demand later in the session and rallied to as high as 161,800 yuan before settling slightly below that, at 161,740 yuan.

The futures had retraced much of the earlier damage and were trading above levels cited in a Mysteel daily market report around 160,500 yuan.

It’s worth noting that Mysteel’s assessment of the most actively traded contract showed a drop of 6.58%, whereas its assessment for battery-grade physical LiCo3 retreated just 0.21% to 168,800 yuan. The prices came from different sources and different time frames.

Yet, the direction indicated by both reports is clear: The futures market contained much of Monday’s volatility as participants adjusted for potential supply.

Spot and Futures Markets Send Different Signals

Meanwhile, battery-grade lithium carbonate, priced in yuan, has declined significantly from early June levels of over 24,000 yuan a ton and settled Monday around 20,458 yuan.

In contrast, the future contract regained considerable ground from Monday’s opening sell-off. This created a premium for future months versus current spot prices, also known as contango, suggesting future values trade above physical market values and do not point to an ongoing price collapse.

But high inventories, possible mine restart talks, and selling pressure could still cloud near-term price action. Futures trading at a premium over spot suggests 160,000 yuan will be the next key price test level, and immediate price support could be seen at Monday’s day low near 151,000 yuan.