Lithium stocks rise following reports of possible production cutbacks at China's CATL

Shares of companies in the lithium sector experienced a significant increase on Wednesday after analysts reported that Chinese battery manufacturer Contemporary Amperex Technology (CATL) is considering a possible suspension of its extensive lepidolite mine in eastern China. According to a report by UBS analysts on September 11, the potential suspension by CATL — better known as CATL — could reduce approximately 8% or about 5,000-6,000 tons of the monthly production of lithium carbonate equivalent (LCE) in China. "This is not the first time we have heard that CATL is cutting/stopping lithium production in Jiangxi. Although previous reports turned out to be speculative, this time we are more convinced," the analysts wrote. In response to the report, CATL announced adjustments to lithium carbonate production in the Chinese city of Yichun due to current market conditions, as reported by Reuters. Citi analysts stated in a separate note that CATL is also considering shutting down one of its three lithium carbonate production lines, reported the Wall Street Journal. Lithium is considered a key component in the broader transition to green energy. The metal is used in batteries for electric vehicles; however, weak demand for the vehicles and a surge in new mines have diminished its attractiveness. The unconfirmed reports that CATL is cutting production have fueled hopes for an imminent easing of the supply glut. "CATL's suspension of lithium production in Jiangxi will [...] help align supply with demand," UBS analysts said. In Australia, shares of lithium miners Pilbara Minerals and Mineral Resources rose. In the U.S., shares of Arcadium Lithium, Lithium Americas Corp, Albemarle, and Lithium Americas also saw a significant rise in pre-market trading on Wall Street.