CATL's unexpected decision to restart its Jianxiawo lithium mine after just 30 days - rather than the anticipated three months - has caught markets completely off guard and triggered a brutal selloff across lithium stocks.
Company execs told employees in a Tuesday morning meeting this week to gear up for resumption at the mine site and start recalling front-line workers.
The mine's production halt on August 10 initially sent lithium carbonate prices rocketing 24% across China, but the early restart news has now all but obliterated those price gains.
Lithium giants Albemarle crashed 12%, Lithium Americas dropped 4.5%, and SQM tumbled 6% as traders scrambled to unwind positions.
Lights off, lights on
The Jianxiawo mine sits in Yichun, Jiangxi province - dubbed the "Lithium Capital of Asia" - and churns out over 46,000t of lithium carbonate equivalent annually.
That's roughly 3% of the world's projected lithium supply for this year, so even a brief disruption at the facility matters - especially when China processes >60% of the world's lithium.
It all kicked off last month when CATL's mining licence for Jianxiawo expired on August 9, forcing the company to halt operations - then speculated to cause a production halt until November as it chased a renewal.
What amplified the spike in global lithium prices was CATL's monster market position.
The company is intrinsic to the global battery supply chain and commands a whopping 38% slice of the lithium-heavy global EV battery market, so when it pulled the plug on Jianxiawo, lithium carbonate prices in China exploded from about 70,000 yuan/t to 86,500 yuan/t.
Genuine panic about supply getting squeezed had triggered a feeding frenzy. Lithium giant Tianqi rocketed 19% in Hong Kong, while Ganfeng Lithium exploded 21% higher.
Australian producers went ballistic too - Pilbara Minerals shot up 20%, Liontown Resources 25% and Mineral Resources 14%.
Short-lived
Current lithium prices have now collapsed back down to 74,585.08 yuan/t, again miles below peak levels.
The cause? Weaker EV demand growth and new mine production are flooding global markets.
It's a far cry from 2022 when spot lithium carbonate prices in China peaked above 600,000 yuan/t and a reflection of the current oversupply in the market.
Meanwhile, Beijing is torching overcapacity across multiple industries, targeting sectors including steel, coal, and renewable materials.
The shutdown coincided with this broader crackdown, but the swift reversal suggests Chinese authorities recognise lithium's strategic importance despite their anti-overcapacity crusade.
Pilbara still trades around 70% above its June crater, while Chinese carbonate futures remain 25% higher than prior to Jiangxiaow's August shutdown.
