Shares of North American lithium producers surged on Monday after news that a major Chinese lithium mine would halt operations, a move investors believe could ease a global supply glut and support a rebound in prices for the battery metal.
CATL, the world’s largest battery manufacturer, confirmed it has suspended operations at its Jianxiawo mine in Yichun, a key lithium hub in China.
The shutdown, effective Monday, comes as the company seeks to renew an expired mining permit.
Market watchers had been monitoring the mine’s fate closely in recent weeks, amid speculation that Chinese authorities might not extend its license.
According to Bank of America Corp., the Jianxiawo mine accounts for roughly 6% of global lithium output.
The unexpected suspension has heightened expectations that reduced supply from China could benefit foreign producers and stabilize the market.
Major gains for US and Chilean producers
The news triggered sharp gains for lithium producers, particularly in North America and South America.
Shares of US-based Albemarle Corp. rose nearly 16% in New York trading, marking its largest intraday gain in four months.
Piedmont Lithium Inc. climbed as much as 18%, while Lithium Americas Corp. advanced up to 14%.
Chilean producer Sociedad Química y Minera de Chile S.A. (SQM) also saw strong gains, jumping as much as 12% in US trading.
Martin Jackson, head of battery raw materials at consultancy CRU Group, noted that “in the short term, abrupt supply cuts would trigger further price volatility, disrupt the domestic battery industry and benefit foreign lithium miners.”
Supply glut challenges and market outlook
The lithium market has been weighed down by a persistent oversupply, exacerbated by slower-than-expected demand growth in the electric vehicle (EV) sector.
Demand headwinds in the US have included policy changes such as President Donald Trump’s rollback of EV incentives, reducing the pace of adoption.
The Jianxiawo mine closure could narrow the supply surplus, potentially bolstering prices that have been under pressure for months.
Bloomberg Intelligence analyst Sean Gilmartin described the suspension as supportive for prices in the near term and “bullish for producers such as Albemarle Corp. and SQM.”
Gilmartin added that the reduction in Chinese output could mark a turning point for the lithium market.
With fewer supply ramp-ups expected in the coming years, the fundamentals may become more constructive, particularly as demand is still projected to grow by 15% over the next two years.
Potential for a market bottom
Some analysts suggest the recent developments could signal that lithium prices have found a bottom.
The sudden supply cut from one of the world’s largest mines has shifted sentiment, with traders and investors positioning for a possible recovery.
While volatility is likely to persist in the short term, the combination of reduced supply and steady demand growth could help rebalance the market.
For now, lithium producers—especially those outside China—are emerging as key beneficiaries of the disruption in the world’s largest battery metals market.
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