LITHIUM prices have rebounded sharply after a three-year slump, with the CME lithium hydroxide contract up 86% since January and trading above $20,000 per ton for the first time since late 2023.
But analysts caution the recovery may be short-lived, said a Reuters columnist in an article on Monday.
The catalyst was CATL’s suspension of operations at its Jianxiawo mine in Jiangxi province last August, after its mining licence expired, said Reuters. The news sparked a wave of speculative buying on the Guangzhou Futures Exchange, where volumes briefly soared before exchange authorities intervened with higher trading fees, margin requirements and position limits, the newswire said.
Jianxiawo has nameplate capacity of 150,000 tons of lithium carbonate equivalent annually, making it one of the largest single lithium assets in the world, according to Benchmark Mineral Intelligence. Its closure has accelerated an inventory drawdown along China’s processing chain, leaving prices more sensitive to any additional supply disruption, including Zimbabwe’s short-lived raw materials export ban in February.
CATL originally expected its licence to be renewed within three months. It is still waiting, said Reuters.
Most analysts expect a price correction in the second half of the year as higher prices draw idled capacity back into production. Benchmark Mineral Intelligence forecasts a material decline, BNP Paribas argues prices have disconnected from fundamentals, and even bullish Citi puts its $32,000 per ton hydroxide target on a three-month horizon before anticipating a retreat.
The broad view is that any boom will be modest and brief – with the timing of Jianxiawo’s licence renewal the single biggest variable in the outlook.
