Lithium carbonate futures surge after months of decline amid China's policy shift

Lithium carbonate futures have rebounded after months of decline, signalling a shift in market sentiment. The recovery follows a prolonged sell-off that began in early 2025, with prices now trading well above a key breakout level. Recent policy changes in China have also drawn fresh attention to the sector. On May 1, lithium carbonate futures surged past the 22.25 level, closing at 24.57 and breaking through a prior resistance area. This upward move marked a turning point after an extended bear market, with analysts now eyeing a potential target of 30.

A front-line LFP battery factory reported that crude ore containing less than 0.4% lithium grade may no longer be mined without official approval. The restriction reflects tighter controls on lower-quality extraction, aligning with broader regulatory shifts. China’s State Council, led by Premier Li Qiang, approved draft implementation regulations for the Mineral Resources Law on May 9. The new rules aim to strengthen mineral resource management, improve reserve systems, and bolster national mineral security. These changes have reignited investor interest in lithium. Market activity remained steady on May 8, despite a slight dip. GFEX lithium carbonate LC2609 fell by 620 yuan (0.31%) to 196,560 yuan per tonne, while open interest stood at 513,252 and trading volume reached 244,199. Analysts continue to monitor the split setup for daily lithium analysis, balancing policy-driven supply factors with technical chart signals.

The lithium market is showing signs of recovery, supported by both technical breakouts and regulatory updates. With stricter mining standards and improved resource management, the sector is positioning itself for tighter supply controls. Prices will likely remain volatile as traders assess the impact of these changes.