UBS has raised its lithium price outlook after CATL paused operations at its Jianxiawo lepidolite mine in China, fueling supply concerns amid intensified regulatory scrutiny in the region. The mining suspension took effect following the expiration of CATL’s license on August 9, with the company signaling a closure period of “at least 3 months,” according to a UBS research note published Monday.
This halt is part of China’s broader anti-involution crackdown, which targets issues such as mining license violations and production levels exceeding authorized capacity. Prior to this, UBS estimated that, beyond the already suspended 11,000 tons per year of lithium carbonate equivalent (LCE) from Zangge Mining, as much as 229,000 tons of lithium supply could be at risk due to non-compliance with licensing requirements.
In light of these developments, UBS increased its price forecasts for spodumene by 16% to 27% and for lithium chemicals—including carbonate and hydroxide—by 5% to 14% over the 2025–2028 period. The bank now believes that “the worst of the lithium price downcycle has passed,” although its projections remain below the broader market consensus.
UBS also revised supply growth expectations for Australian producers following recent quarterly results and delayed Rio Tinto’s (NYSE:RIO) James Bay project from its original timeline of 2025/26.
On the demand front, global electric vehicle sales rose 26% year-over-year in June, with China leading the growth at 31%. Chinese EV manufacturers currently account for roughly 64% of the global market. While sales in North America declined, Europe’s market accelerated by 26% year-over-year in June, and the Asia Pacific region excluding China surged by 55%.
The battery energy storage system (BESS) sector is also expanding rapidly, with the project pipeline increasing by 115% year-over-year and representing approximately 1.6 terawatt-hours (TWh) of capacity planned between 2025 and 2030.
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