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China’s lithium shares rally after brutal sell-offHopes prices have hit a bottom after a dramatic two-year decline September 19, 2019 11:55 am by Henry SandersonShares in China’s largest lithium producers rallied on Thursday on hopes that prices for the battery raw material have hit a bottom after a dramatic two-year decline. Shenzhen-listed shares in China’s largest producer Tianqi Lithium rose by 6.6 per cent while Hong Kong-listed shares of its rival Ganfeng Lithium rose by 4 per cent on Thursday. The share price turnround follows a brutal year for the sector, which has struggled with falling prices and a cut in subsidies for electric cars in China. Sales of electric cars in China fell for two straight months in July and August. Prices for lithium carbonate, which is used in lithium-ion batteries, have tumbled by 30 per cent over the past year, according to Benchmark Mineral Intelligence, due to a surge in supply from new mines in Australia. Still, investors may be warming to the sector on hopes for a recovery. Shares in Ganfeng Lithium have risen 14 per cent since the beginning of August to trade at HK$11.5.Prices for lithium have dropped below the cost of production for some producers, according to analysts at Citi. At the same time there is room for recovery in electric cars sales in China as “targeted stimulus could be imminent,” they said. Still, the bank warned that the market “remains in substantial surplus” and there needs to be more supply cuts by producers. In August the world’s largest producer, Albemarle, said it would delay construction of around 125,000 tonnes of lithium processing capacity in the face of low prices.