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| lithium carbonate |
Speculation and Oversupply Pressures Fuel Lithium Price Swings
China’s lithium market experienced sharp volatility after lithium carbonate prices on the Guangzhou Futures Exchange jumped 14% last week. On Friday alone, prices rose the daily limit of 8%, prompting the exchange to curb speculative trading. This spike reflects growing anxiety over supply disruptions, regulatory clampdowns, and oversupply risks tied to China’s anti-involution campaign targeting overcapacity.
Supply Chain Under Scrutiny in Yichun and Beyond
However, physical supply disruptions are emerging. The Yichun Bureau of Natural Resources ordered eight miners to submit reserves reports, citing compliance issues. Jiangxi province, producing roughly 10% of global mined lithium, has become a focal point for regulatory audits. Jiangxi Special Electric Motor Co. will suspend lithium salt production for 26 days, while Sinomine Resource Group halts a Jiangxi project for six months to revise processing methods.
Market Braces for Stricter Oversight and Export Implications
Meanwhile, authorities in Qinghai ordered Zangge Mining to cease illegal lithium mining. Although output loss is minor, traders fear regulatory inspections may evolve into supply control mechanisms. The result has been a rebound in spodumene prices and volatility on CME lithium contracts. Investors are watching for signs that government actions may reduce supply in an already fragile market.
ScrapInsight Commentary
China’s lithium supply chain is entering a high-alert phase. While current output remains stable, regulatory tightening could tighten feedstock availability for battery-grade lithium. Market participants should prepare for increased pricing volatility and potential shifts in global trade flows for lithium compounds.
