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Investing.com -- UBS has upgraded its lithium price outlook after CATL halted mining at its Jianxiawo lepidolite mine in China, adding to supply concerns amid broader regulatory scrutiny in the country.
CATL stopped operations at the mine after its mining license expired on August 9, with the company indicating a closure of "at least 3 months," according to a UBS research note published Monday.
The halt comes amid China’s ongoing anti-involution crackdown, which has targeted mining license irregularities and production above approved capacity.
UBS previously estimated that in addition to the already halted 11,000 tons per year of lithium carbonate equivalent (LCE) from Zangge Mining, up to 229,000 tons of lithium supply could be at risk from license non-compliance.
Following these developments, UBS has raised its price forecasts for spodumene by 16-27% and for lithium chemicals (carbonate and hydroxide) by 5-14% across 2025-2028.
The bank now believes "the worst of the lithium price downcycle has passed," though its forecasts remain below consensus.
The bank also adjusted expected supply growth for Australian producers following quarterly reports and delayed Rio Tinto (NYSE:RIO)’s James Bay project from its original 2025/26 timeline.
On the demand side, global electric vehicle sales grew 26% year-over-year in June, led by China at 31% growth. Chinese EV makers now account for approximately 64% of the global market.
While North American EV sales contracted, Europe saw accelerating growth of 26% year-over-year in June, with Asia Pacific excluding China growing 55%.
Battery energy storage system (BESS) growth is also accelerating dramatically, with the total project pipeline now up 115% year-over-year, representing approximately 1.6 TWh of capacity for 2025-2030.
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