Lithium’s CATL prod puts hope over adversity

Liontown

12/08/2025 13:00

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Katrina Hamlin

HONG KONG, Aug 12 (Reuters Breakingviews) - Lithium traders are putting hope over adversity. Contemporary Amperex Technology 300750.SZ, 3750.HK has paused production at a mine representing around 5% of the global supply of the metal, an essential ingredient for electric-car and energy-storage batteries. The idea that this portends a decisive crackdown on Chinese overcapacity may prove a stretch, but even this sliver of potentially good news helps a beaten-down market with excess supply.

    Rival miners’ shares soared on bets that sustained lower production will bring higher prices; Australia’s Liontown Resources LTR.AX spiked as much as 25% on
    Monday
    . The most active
    lithium
     carbonate futures on the Guangzhou Futures Exchange surged by 8%. That's reading more into CATL's statement than, on the surface, seems reasonable. The $170 billion group said on Monday that it sus
    pended production at the Jiangxi site after failing to secure a new licence and is applying to renew it as soon as possible.

The bull case goes like this: the permit snafu shows Beijing has a tool to counter provincial governments which encourage local industry to keep output above demand. The central Ministry of Natural Resources is ultimately responsible for approving mining licences and is now enforcing that rule. People's Republic-located facilities with a lithium supply equivalent to as much as 16% of the global total have been operating without an appropriate permit or have yet to declare their situation, according to researchers at CRU.

However, a mass shutdown seems like wishful thinking. First, the idea that national champion CATL has been called out as part of a major campaign against overcapacity is jarring; it uses the lithium from Jiangxi for its battery operations, which boast capacity utilisation of 90%, management said earlier this year. Also, suspensions are easily reversed once paperwork is in order. Indeed, CATL’s mine was shuttered in 2024 and reopened earlier this year, prior to the licensing hitch.

However, if a regulatory shuffle shrinks supply even a little, that fuels nascent hopes of a revival after prices fell roughly 90% from 2022 highs. Skinnier margins discouraged expansion globally, and demand is still rising. True, sales of electric cars – which account for the majority of lithium use – are growing more slowly than before. But global deliveries still rose roughly a third in the first half of the year compared with the same period in 2024, per Bernstein. Meanwhile, the home and utility battery energy storage market is likely to expand 37% this year, according to Fastmarkets.

The world’s largest battery maker might not reverse the lithium market’s fortunes, but the CATL prod gives pessimists reason to reassess.

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CONTEXT NEWS

Chinese battery maker Contemporary Amperex Technology has suspended production at a major lithium mine in Jiangxi province, the company said on August 11. A licence for the mine expired on August 9, and the company is applying to renew it “as soon as possible”, it said.

The most active lithium carbonate futures on the Guangzhou Futures Exchange surged by 8% during intraday trading, the maximum permitted, after the announcement.

CATL’s Hong Kong-listed shares rose 2.3% on August 11, while its Shenzhen-listed shares rose 0.7%.

China's tightening regulation could impact a large chunk of global supply https://www.reuters.com/graphics/BRV-BRV/gkplajanavb/chart.png

Lithium carbonate price has plumetted from its 2022 peak https://www.reuters.com/graphics/BRV-BRV/jnpwblbmdvw/chart.png

(Editing by Antony Currie; Production by Ujjaini Dutta)

((For previous columns by the author, Reuters customers can click on HAMLIN/katrina.hamlin@thomsonreuters.com; Reuters Messaging: katrina.hamlin.thomsonreuters.com@reuters.net))