Shares related to lithium battery concepts are experiencing a broad sell-off.

At the time of writing, CALB (03931) fell 5.91% to HK$21.64, LOPAL TECH (02465) declined 6.09% to HK$10.48, Tianqi Lithium Corporation (09696) dropped 5.01% to HK$34.54, and Ganfeng Lithium Group Co.,Ltd. (01772) was down 2.19% at HK$42.84.

The downward pressure stems from market expectations of increased lithium supply.

With the Jianxiawo lithium mine, associated with CATL, entering a production restart cycle, the market anticipates it will bring substantial new volumes of lithium carbonate to the industry. This is expected to potentially weaken the current tight supply-demand balance.

Furthermore, in early July, the largest lithium ore processing plant in West Africa officially began operations. This facility has a daily processing capacity of 6,000 tons of raw lithium ore, translating to an annual capacity of 3 million tons, equivalent to approximately 30,000 tons of lithium carbonate. This development has heightened market concerns about a potential oversupply of lithium products.

It is also noteworthy that Chilean mining companies SQM and Codelco have disclosed plans for a major expansion of their salt lake lithium operations. The joint venture, involving a total investment of $3 billion to revamp and expand existing brine lithium projects, currently has a lithium production capacity of 270,000 tons per year. The future target is to increase this capacity to 470,000 tons per year, representing an overall production increase of over 70%.