Prices of lithium carbonate futures in China hit their lowest in nearly three weeks on Thursday on easing concerns over potential production suspensions in Yichun in the south of the country after a local miner secured safety licence.
The most active lithium carbonate futures on the Guangzhou Futures Exchange touched the lowest level since August 8 at 75,740 yuan ($10,589) a metric ton.
Prices of the electric vehicle battery material had surged this month after Contemporary Amperex Technology (CATL) halted production at a lithium mine in Yichun following expiry of a mining licence on August 9.
That stoked fears of a wider production suspension in the lithium production hub of Yichun in Jiangxi province, where several other mines face licence issues.
A lithium mine owned by Yongxing Special Materials, however, secured renewal of a safe production licence that was set to expire on September 6, according to company information tracker Qichacha and consultancy Mysteel.
“The market had previously doubted the mine could successfully renew the licence, so a success, especially one that came earlier than expected, really beat expectations, temporarily easing supply concerns,” said Jinyi Su, analyst at consultancy Fubao.
However, analysts warned that supply risk lingers and the market is monitoring whether seven other mines will have to pause production after September 30.
“A risk of production suspension in Jiangxi has not been eliminated as the approved mineral type is still the ceramic clay,” Mysteel analysts said.
Some mines that had secured licences for ceramic clay but actually produce lithium could face uncertainty over licence renewal, analysts said.
($1 = 7.1529 Chinese yuan)
(Reporting by Amy Lv and Lewis Jackson; Editing by Jacqueline Wong and David Goodman)
