GANFENGLITHIUM shares dropped sharply by 5.04% during Friday's trading session, giving back a significant portion of the gains from the prior session. The decline comes as short-term investors lock in profits after the stock’s H-shares surged over 10% and its A-shares climbed nearly 8% in the previous trading day.

Market sentiment was further dampened by regulatory news, as three government departments confirmed that a 2% consumption tax on lithium batteries will take effect starting in September. This policy change has prompted downstream buyers to slow their procurement, suppressing demand expectations for lithium salts. Additionally, while the company's preliminary first-half earnings preview indicated a turnaround with a net profit between RMB 3.65 billion and RMB 4.6 billion, the sequential growth in the second quarter showed a notable deceleration, suggesting the positive earnings catalyst was already priced into the stock.

The weakness was also reflected across the sector, with peer TIANQI LITHIUM falling 1.34% on the same day, highlighting broader pressure on lithium-related stocks.