CATL plans to limit production of its main lithium mine. Citi suggests more production cuts may follow, with lithium mining stocks in the US rising in response
CATL is considering suspending some lithium mining and production operations, leading to a surge in lithium mining stocks in the US. On Wednesday, Albemarle's stock price rose by 13.6%, making it the company with the largest increase in the S&P 500 index. Citigroup analyst Jack Shang stated that CATL may close some lithium carbonate production lines, with an expected monthly reduction of 6,000 tons in supply. In addition, lithium production has decreased by 14%, leading to a positive sentiment in lithium prices and expected acceleration in destocking processes. Other lithium miners such as SQM, Arcadium, and Pilbara have also seen increases in their stock prices
According to Zhitong Finance, on Wednesday, after CATL (300750.SZ), the world's largest electric vehicle battery manufacturer, considered suspending some lithium mining and production operations, lithium mining stocks in the US soared. At the close on Wednesday, lithium mining giant Albemarle (ALB.US) easily became one of the companies with the largest increase in the S&P 500 index, with a rise of 13.6%.
Citi analyst Jack Shang cited industry sources as saying that CATL is considering whether to seal off one of its lithium mica mines in eastern China and three lithium carbonate production lines. He estimates that CATL may choose to shut down the other two lithium carbonate production lines in the future, reducing supply by as much as 6,000 tons per month from the market.
In addition to CATL's potential capacity reduction, Shang stated that lithium mining output has decreased by 14% in recent weeks. He wrote, "We have seen a recent increase in lithium prices, which is also benefiting from the traditional peak season from September to October, with cathode production expected to increase by 6% month-on-month. This should also accelerate the destocking process of lithium."
Other related lithium mining companies also rose, including Sociedad Química y Minera de Chile (SQM.US) up 10%, Arcadium Lithium (ALTM.US) up 15.5%, Pilbara Minerals (PILBF.US) up 19.1%, Sigma Lithium (SGML.US) up 12.8%, Lithium Americas (LAC.US) up 5.9%, and Standard Lithium (SLI.US) up 14.4%