Is the bottom in?, page-1752

Time for something with substance that is based on facts.....rather than fiction, baiting other posters and unsubstantiated innuendo.

Lithium stocks surge as Chinese giant suspends major mine (marketindex.com.au)

Some excerpts:

Key Points

• CATL's suspension of lithium operations in China has triggered a significant rally in ASX lithium stocks, with Pilbara Minerals leading gains of up to 17%
• UBS projects an 8% cut in China's monthly lithium production due to CATL's suspension, forecasting an 11-23% upside for lithium prices in 2024
• Extensive short selling in lithium stocks may be contributing to the sharp rally, with Pilbara Minerals being the most shorted stock on the ASX

Major lithium and battery manufacturer CATL has officially announced the suspension of its lithium lepidolite operation in Jiangxi. While rumors of CATL cutting or suspending lithium production in Jiangxi have circulated before, UBS expresses higher conviction this time. According to their channel checks with several contacts, CATL made the decision to suspend operations after a meeting on September 10.

UBS notes that spot prices for lithium have been below CATL's cash cost level since mid-July 2024. While they previously believed CATL would tolerate losses in its lithium business, the company's decision to suspend operations after two months of losses and continued downside risk on lithium prices represents a normal supply response from a marginal-cost producer.

CATL's suspension is expected to result in an 8% cut in China's monthly lithium carbonate equivalent production, or about 5-6,000 tonnes. As a result, UBS projects a positive impact on lithium prices, forecasting an 11-23% upside for the remainder of 2024.

Chinese lithium carbonate futures are currently trading 5.5% higher to 76,700 yuan a tonne but still down around 27% year-to-date.

While the short-to-medium term outlook for lithium remains uncertain, a recent unexpected supply cut has triggered a pronounced one-day rally. This sudden upward movement typically leads to short covering, as short sellers buy back shares to limit potential losses. This buyback activity can further propel share prices upward, potentially explaining the strong rally observed in lithium stocks on Wednesday.