China’s lithium market turmoil: Prices crash as regulators tighten trading rules

• Lithium carbonate futures on China’s Guangzhou Futures Exchange (GFEX) plummeted 9% after regulators tightened trading rules, including higher fees and position limits, to curb speculation. This erased recent gains, with prices dropping to 91,020 yuan/ton from a peak of 102,500 yuan/ton the day prior.
• Reports indicate Contemporary Amperex Technology Co. (CATL) may restart production at its Jianxiawo lithium mine (46,000-ton annual capacity), adding supply to a market already struggling with weak EV demand. The mine had been idle since August due to licensing issues.
• Major producers like Albemarle (-6%), SQM (-5.5%) and Sigma Lithium (-6%) saw sharp declines, reflecting China’s outsized influence on lithium pricing despite positive company-specific developments elsewhere.
• Prices remain highly sensitive to Chinese policy shifts (e.g., mining restrictions, trading rules) and supply disruptions (e.g., energy rationing in Sichuan). Speculation and regulatory actions are exacerbating price swings.
• Traders are watching CATL’s official restart timeline, the effectiveness of GFEX’s new rules, and year-end procurement cycles for potential stabilization—though short-term turbulence is expected to continue.

Lithium prices in China experienced a dramatic plunge Friday, Nov. 21, erasing recent gains after regulators intervened to curb speculative trading and reports surfaced that battery giant CATL may restart production at a key lithium mine.

The sudden downturn highlights the volatility of the lithium market, where government policies and corporate supply decisions can trigger rapid price swings.

According to BrightU.AI‘s Enoch, the lithium market refers to the global industry involved in the mining, processing and distribution of lithium—a soft, silvery-white metal and an essential component in various technologies, including rechargeable batteries, electric vehicles (EVs) and energy storage systems.

The most-active lithium carbonate futures contract on the Guangzhou Futures Exchange (GFEX) plummeted 9% to 91,020 yuan ($12,804) per metric ton, hitting its daily lower limit. This sharp reversal came just one day after the same contract surged to 102,500 yuan per ton, its highest level since June 2024.

The abrupt correction followed GFEX’s announcement that it would increase transaction fees for lithium carbonate futures starting Nov. 24 and impose daily position limits for non-futures company members. Analysts widely interpreted the move as an attempt to rein in speculative trading that had fueled the recent rally.

CATL mine restart threatens oversupply fears

Adding to the downward pressure, Bloomberg reported that CATL (Contemporary Amperex Technology Co. Ltd.), the world’s largest battery manufacturer, is preparing to “restart production at its Jianxiawo lithium mine in Yichun, Jiangxi Province.” The mine, which produces 46,000 tons of lithium carbonate equivalent (LCE) annually—roughly 3% of global projected supply for 2025—has been idle since August due to an expired mining license.

Two sources familiar with the matter told Reuters that CATL has instructed its lithium carbonate smelters to “prepare for a potential resumption,” though no official timeline has been confirmed. The company did not respond to requests for comment.

If CATL successfully restarts operations, the additional supply could exacerbate concerns about oversupply in a market already struggling with weak demand growth for electric vehicles (EVs) and energy storage systems.

Global lithium stocks tumble

The ripple effects of China’s lithium price crash were felt worldwide, with major lithium producers seeing sharp declines in their stock prices:

• Standard Lithium (TSXV: SLI) plunged 7%
• Albemarle (NYSE: ALB) dropped 6% in pre-market U.S. trading
• SQM (NYSE: SQM), Chile’s top lithium producer, fell 5.5%
• Sigma Lithium (NASDAQ: SGML) weakened by 6%

The synchronized selloff underscores China’s dominance in global lithium pricing. Despite positive developments for companies like Standard Lithium, which recently saw its price target raised by Canaccord Genuity, broader market sentiment remains tightly tied to Chinese supply dynamics and regulatory actions.

What’s next for lithium prices?

Market watchers are now focused on three key factors:

• CATL’s official confirmation of its mining license renewal and restart timeline.
• The impact of GFEX’s stricter trading rules—whether they effectively reduce speculation or stifle liquidity.
• Whether prices stabilize ahead of year-end procurement cycles, when battery manufacturers typically stockpile materials.

In the short term, lithium prices are expected to remain highly sensitive to Chinese policy shifts and supply-side developments. With Sichuan’s lithium mining hub already facing energy rationing—which previously pushed prices toward record highs—any further disruptions or regulatory crackdowns could trigger another wave of volatility.

For now, investors and industry players must brace for continued turbulence as China’s lithium market navigates regulatory scrutiny and shifting supply expectations.

Watch the video below about China’s lithium carbonate prices rising due to power restrictions in Sichuan.

This video is from the Chinese taking down EVIL CCP channel on Brighteon.com.

Sources include:

Mining.com

MiningReporters.com

StocksToday.com

BrightU.ai

Brighteon.com