FX.co ★ Lithium Rises to Near 2-Month High

In October, lithium carbonate prices climbed to CNY 76,500 per tonne, marking their highest level in nearly two months, fueled by signs of increased demand. Notably, the production of new energy vehicles in China surged by 20.3% year-over-year in September, achieving the highest growth rate since the beginning of the year. Consequently, industry data indicated a decline in lithium inventories for downstream sectors for the third consecutive week. Nevertheless, the presence of relatively abundant supply prevented futures from reaching the one-year high observed in August. Reports suggested that Chinese authorities approved reserve reports facilitating the resumption of activity in CATL's Jiangxi mine. The reopening news counteracted the spike in lithium prices, which had surged following CATL's inability to extend mining permits in the region, a hub contributing approximately 3% of global supply. In addition to the direct supply increase from operations in Jiangxi, the event tempered the extent of supply reductions that the Chinese government was willing to implement as part of its new capacity-reduction strategy aimed at mitigating deflationary pressures.