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Investing.com -- Lithium producers faced significant pressure Tuesday as Albemarle (NYSE:ALB) stock fell 12%, Lithium Americas (NYSE:LAC) dropped 4.5%, and SQM (NYSE:SQM) declined 6% following reports that a major Chinese lithium mine will soon resume operations.
The selloff came after Chinese state media outlet Securities Times reported that Contemporary Amperex Technology Co. Limited (CATL), a leading battery manufacturer, plans to restart production at its lithium mine that had been suspended since August. The mine’s shutdown had previously sparked a rally in lithium prices and related stocks.
When CATL initially halted operations at the Chinese mine last month, investors had anticipated reduced lithium supply would support higher prices in the market. The news of production resuming has reversed that sentiment, putting downward pressure on the entire lithium sector.
Lithium is a critical component in electric vehicle batteries and energy storage systems. Supply fluctuations can significantly impact pricing throughout the supply chain, affecting both miners and battery manufacturers.
The lithium market has been volatile in recent years as producers have worked to balance supply with the growing demand from electric vehicle manufacturers and renewable energy storage projects.