Australian lithium stocks rally on speculation of China mine closure

PMET Resources

19/02/2024 02:17

MELBOURNE, Feb 19 (Reuters) - Australian lithium stocks
rallied on Monday on speculation that Chinese battery maker CATL
 300750.SZ  had closed its Jianxiawo mine in China that produces
the material used in electric vehicle batteries.
    Shares of Australia's biggest pure play lithium miner
Pilbara Minerals  PLS.AX  rallied as much as 4.9% and Liontown
Resources  LTR.AX  surged 7.7%, amid an upbeat tone in
Australian resources companies.
    Jianxiawo produces lepidolite, which is a high-cost form of
lithium.
    CATL did not immediately respond to a Reuters request for
comment.   
    "CATL are apparently reluctant to continue production below
95,000RMB/t (~US$13,000/t) for lithium carbonate," Barrenjoey
said in comments on Friday.
    That mine, which would provide 3% of global supply, would
move the market from a 1% surplus to a 2% deficit of around
20,000 for 2024, it said. 
    In Australia on Monday, developers saw outsize gains, with
Patriot Battery Metals  PMT.AX  as high as 6%, Wildcat Resources
 WC8.AX  up 5.8%, and Sayona Mining  SYA.AX  up 7.7%.
    Pilbara Minerals is Australia's most heavily shorted stock,
given investors have viewed it as a proxy for a slowdown in
electric vehicle demand.
    Lachlan Shaw, analyst at UBS, said it was not uncommon for
facilities in China to shut or slow during Chinese New Year
holidays.  
    "If confirmed that Jianxiawo has shut, and that the shut is
on economic grounds rather than temporarily for Chinese New
Year, it's an important step in the necessary market rebalancing
that we are looking for," said Melbourne-based Shaw.
    "A key question is why the world’s biggest battery
manufacturer who is growing quickly would shut their fully
integrated lithium mine when lithium prices are around UBS’
understanding of break even levels." 

 (Reporting by Melanie Burton; Additional reporting by Zoey
Zhang and Zhang Yan in Shanghai; Editing by Muralikumar
Anantharaman)
 ((melanie.burton@thomsonreuters.com Twitter: @MelanieMetals;
+613 9286 1421; Reuters Messaging:
melanie.burton.thomsonreuters.com@reuters.net))