Lithium carbonate, up limit! What is the actual impact of frequent production shutdowns of "short essays"?

Lithium carbonate, up limit! What is the actual impact of frequent production shutdowns of "short essays"?

As the market's anti internal competition sentiment continues to heat up, lithium carbonate futures continued to rise this week. On July 25th, lithium carbonate futures prices opened high and rose, with the main contract hitting the daily limit up. Subsequently, market divergence became apparent, with repeated opening and closing at the limit up again in the late trading session, closing at 80520 yuan/ton with a weekly increase of 18.38%. Industry insiders believe that the sharp rise in lithium carbonate futures prices this week is mainly driven by market sentiment, with no significant changes in fundamentals.

The expectation of supply contraction continues to ferment. This week, the market once again reported a "small essay": the mining license of Jiangxi's large factories is about to expire. Due to problems in the previous mineral evaluation, it is necessary to revise the reserve report and change the mineral type. The mining license may not be renewed in a timely manner before August 9th, and there is a possibility of long-term production stoppage and rectification. In fact, since mid July, mining violations and license renewal issues have continued to attract market attention, and various "small essays" have taken advantage of the situation to ferment, causing fluctuations in lithium carbonate futures prices.

On July 14th, it was reported in the market that the Natural Resources Bureau of Yichun City required 8 mines to prepare reserve verification reports, and the main contract of lithium carbonate futures rose by more than 6% at one point, but then the increase narrowed. On July 17th, news of the suspension of the lithium salt project at Zangge Mining was reported, and lithium carbonate futures prices rose in the afternoon. Subsequently, Zangge Mining announced that the relevant projects have been shut down as required and the legal procedures for lithium resources will be improved. It is understood that the production of Zangge potassium fertilizer accounts for a relatively small proportion, and its actual impact on the market is limited. As of the close of the day, the futures price of lithium carbonate rose by over 2.4%. Overall, industry insiders believe that the main reason why the above news can attract market attention is the continuous fermentation of the "anti involution" sentiment in the current commodity market, which enhances the market's expectation of supply contraction in the lithium carbonate industry. Xie Ling, an analyst at the China International Trade Futures Nonferrous Metals Research Center, believes that the recent rise in lithium carbonate futures prices is mainly due to rumors of supply contraction boosting market sentiment, but the substantial impact on fundamentals is limited. Yang Fei, an analyst at CITIC Futures, also stated that the reason why the market repeatedly speculates on the issue of Yichun mine shutdown and difficulty in renewing certificates is that the news is currently difficult to confirm or falsify in the short term, which has led to the prevalence of "small essays" in the market. Taking the 8 lithium resource mining rights incidents in Yichun City as an example, a Futures Daily reporter found through reviewing relevant documents from the Yichun Natural Resources Bureau that this inspection is mainly in response to the issues raised in the "Audit Report on the Development, Utilization, Protection and Related Funds of Mineral Resources in Jiangxi Province" provided by the Audit Office in June 2025. The report states that 8 lithium related mineral rights, including Zhenkouli Fengxin County Jianxiawo Ceramic Soil (including lithium) Mine, Jieshili Mining Area Shuinan Ceramic Soil (including lithium) Mine, Jinzifeng Fengxin County Zuojiali Mining Area Ceramic Soil (including lithium) Mine, Huaqiao Mining Co., Ltd. Baishidong Kaolin Mine, Huaqiao Township Huashi Village Huashan Ceramic Stone Mine, Huaqiao Dagang Ceramic Soil Mine, Dongcao Village Dingxing Ceramic Soil Mine, and Tong'an Ceramic Mine in Tong'an Township, Yifeng County, have evaded the approval authority of higher-level departments and exceeded their powers. The issue of transfer, change or continuation of registration procedures. The above-mentioned 8 lithium resource mining rights involve 8 enterprises, including Yichun Times New Energy Mining Co., Ltd., Yichun Guoxuan Mining Co., Ltd., Jiangxi Chunyou Lithium Industry Co., Ltd., and Yichun Shengyuan Lithium Industry Co., Ltd. This verification has brought certain variables to the mining industry at the policy level, and the verification cycle is long with high uncertainty. In the later stage, it is still necessary to track the progress of policies and the actions of enterprises. "Lin Jiayi, an analyst at Guangfa Futures, explained that at this stage, the market is concerned that the operation of large-scale mica mines involved will be affected. It is understood that if the 8 mines involved cease production due to delayed renewal of mining licenses, it will directly affect the production of approximately 15000 to 20000 tons/month of lithium carbonate in the short term. According to feedback from enterprises, there is currently no direct intervention from the government in production and operation, and short-term production capacity has not been substantially affected. A relevant person from Jiuling Lithium Industry told reporters that currently, the company's Jiangxi Chunyou Lithium Industry mine does not need to apply for the renewal of the mining license, and its production and operation are normal and will not be affected in the short term. Relevant personnel from Ningde Times also told reporters that the production plan of the company's mines involved in the above-mentioned documents has not been affected, and there is currently no production suspension arrangement in the future, with no substantial changes in supply. Regarding the mining license issue that is of great concern to the market, the person stated that the company will not be affected in production due to the failure to obtain timely extension approval after the expiration of the mining license. The Futures Daily reporter learned that the approval of mining rights extension belongs to the scope of administrative licensing. According to Article 7 of the Measures for the Administration of Mineral Resources Mining Registration, if the mining license expires and it is necessary to continue mining, the mining right holder shall go to the registration management authority to handle the renewal registration procedures 30 days before the expiration of the mining license. Article 50, Paragraph 2 of the Administrative Licensing Law of the People's Republic of China stipulates that after receiving an application for renewal of an administrative license from an applicant, the administrative organ shall promptly review and make a decision on whether to grant the renewal of the administrative license before the expiration of its validity period. If the administrative agency fails to define before the expiration of the validity period, it shall be deemed to be allowed to continue. Market insider: Rationally view market fluctuations. Since early July, under the influence of the "anti involution" policy, sentiment in the commodity market has continued to heat up.

Zhang Weixin, a futures analyst at CITIC Securities, said that the core driving factor behind the current upward trend of lithium carbonate futures is still the industry's own expectation of supply contraction, but the impact is easily amplified after the introduction of the 'anti internal competition' policy. The official suspension of the price war for new energy vehicles and advocacy for car companies to shorten their payment terms are essentially to give benefits to the upstream of the automotive industry, which will suppress the demand for lithium carbonate in the short term, "said Zhang Weixin.

When it comes to the current expectation of supply contraction and market volatility, industry insiders have expressed that market participants should view the current upward trend rationally. If the price rises to a high level, it is expected that overseas supply, mainly from Africa, will increase. Zhang Weixin believes that the lithium carbonate industry has not yet experienced industrial clearance. When the price rises above 83000 yuan/ton, the corresponding lithium ore price may rise to over 1000 US dollars/ton, and lithium ore supply will increase synchronously with the price. Based on this speculation, even if the 8 mines mentioned above are shut down for a long time, the supply-demand relationship in the industry will not reverse, but only slightly correct the state of oversupply. If prices continue to rise, it may stimulate supply growth to fill the capacity gap of the 8 mines mentioned above, which will bring resistance to price increases and even lead the market back to a state of oversupply. Although the overall performance of the current commodity market is very strong, there has been no substantial improvement in fundamentals, especially on the demand side, and there are currently no supporting measures. "Zhang Weixin explained that unlike the previous round of supply side structural reform, the current market has clearly not focused on the demand side. In 2026, the demand for lithium carbonate will face challenges such as a decline in the growth rate of power batteries and energy storage demand, and a slowdown in the penetration rate of new energy vehicles. However, the current market is gradually eliminating these pessimistic expectations. When the market refocuses trading on the demand side, lithium carbonate futures may return to fundamental trading, and pessimistic demand expectations may not be able to support a true "bull market". The market should view the current upward trend rationally. Yu Shuo also believes that under the influence of the "anti involution" policy, the lithium carbonate market is still dominated by macro sentiment, and the fundamental driving force is not obvious. Overall, the current market is in a game of "strong expectations" and "weak reality", with no significant improvement in fundamentals. It is recommended that investors view market volatility rationally.