Lithium carbonate futures experienced a sharp rally followed by a pullback, with prices briefly plunging during intraday trading. The volatility was triggered by fresh regulatory disclosures concerning CATL's Yichun lithium mining operations, as the Yifeng County government website published the Environmental Impact Assessment Public Notice for the Zhenkouli-Jianxiawo lithium mining project on August 24. While market participants initially interpreted this as a sign of accelerated production resumption, the timeline from the August 17 acceptance of the proposal to the August 24 draft for public comment suggests that restarting operations remains a distant prospect, prompting a subsequent rebound in lithium prices.
In the near term, the fundamental outlook for lithium carbonate remains robust, supported by widening discrepancies in ore supply expectations and accelerating inventory drawdowns that underpin price strength. However, persistent warehouse receipt pressure is likely to cap the upside potential for lithium prices in the current cycle.
Where the market stands now
China's spodumene imports reached 739,300 physical tons in July 2026, reflecting a month-on-month decline of approximately 3.8% from June's 768,400 tons. Breaking down the import sources, shipments from Australia totaled 345,000 tons, down about 7% month-on-month, while Brazilian volumes surged roughly 78% to 116,000 tons. South Africa contributed 109,000 tons, Mali supplied 38,300 tons with a 36% decline, Zimbabwe delivered 21,600 tons representing a 48% drop, and Nigeria provided 104,700 tons, down approximately 9.5% from the prior month.
The July import volume translates to roughly 64,200 tons of lithium carbonate equivalent, which, combined with substantial lithium sulfate imports, continues to support strong domestic demand for lithium-bearing materials.
US refining capacity gets a boost
US critical minerals midstream refiner Nth Cycle has been selected by the US Department of Energy for negotiations on a grant of up to $100 million. The funding is earmarked for the development and construction of a commercial-scale black mass refining facility in the southeastern United States, positioning it among the first commercial black mass refineries in the country. Black mass refers to the material produced from crushing spent lithium-ion batteries.
The facility, designated Project Shield, will leverage Nth Cycle's proprietary electro-extraction platform and OYSTER system to refine up to 24,000 tons of domestic black mass annually. The output will be converted into high-purity mixed hydroxide precipitate containing nickel and battery-grade lithium carbonate, destined for applications in military systems, AI data centers, grid energy storage, and transportation sectors.
Nth Cycle has already secured a ten-year offtake term sheet with Trafigura, committing to purchase 2,000 tons of nickel-bearing MHP and 1,500 tons of lithium carbonate. Project Shield is expected to commence operations in 2029, with the modular OYSTER system enabling installation within existing industrial buildings and delivering capital intensity approximately 70% lower than traditional refining facilities.