New York, Jan 16, 2026, 07:20 EST — Premarket
- China’s lithium carbonate cools off following a steep rally, as futures hit exchange limits hard.
- Leading lithium miners are slipping before the U.S. cash open as policy shifts from Washington and Brazil stir supply concerns.
- Traders are monitoring if policy-driven buying will shift into more consistent physical demand.
Lithium prices in China took a hit on Friday, with the top-traded lithium carbonate futures contract dropping nearly 9%, repeatedly hitting its daily down-limit at 146,200 yuan per metric ton, according to Shanghai Metals Market. Battery-grade lithium carbonate was valued at an average of 158,000 yuan a ton, down 1,000 yuan from the previous session. The SMM battery-grade index also slipped, falling to 159,477 yuan. SMM reported that upstream sellers hesitated to offer spot cargoes amid the price drop, while the lower levels brought some downstream buyers back into the market. 1
This matters because lithium is key to the battery supply chain, and the recent spike in Chinese futures has shifted forecasts for miners’ profits and battery makers’ expenses. That sharp limit-down day serves as a stark reminder: this market can swing quickly, even when the fundamentals seem solid on paper.
Volatility is hitting just as governments and regulators push to control supply locations and price-setting, while producers balance restarts with safety inspections. The market is now moving on policy news and logistical shifts nearly as much as on EV sales.
Albemarle slipped roughly 2.1% in U.S. premarket trading, hitting $173.78. Chile’s SQM dropped around 4.3% to $79.58. Lithium Americas lost close to 3.3%, settling near $5.87. On the other hand, the Global X Lithium & Battery Tech ETF inched up about 0.4%, reaching $70.86.
Brazil’s Labor Ministry ordered the closure of three waste piles at Sigma Lithium’s Grota do Cirilo mine in Minas Gerais, citing a “grave and imminent” risk to workers and local communities, according to Reuters documents. Sigma maintains the shutdown won’t impact its production schedule and denies any safety risks. However, the ministry warned that a collapse could endanger nearby homes or contaminate the Piaui River. The mine has been idle since October. Reuters notes its annual lithium concentrate capacity stands at 270,000 metric tons. 2
In Washington, a bipartisan group of lawmakers has put forward a bill to establish a $2.5 billion Strategic Resilience Reserve aimed at stockpiling critical minerals like lithium. The goal is to stabilise prices and boost domestic mining and refining operations. Senator Jeanne Shaheen said, “Providing targeted investments and stockpiling key inputs will help insulate the U.S. from foreign threats.” The bill still needs approval from both the House and Senate, plus the signature of President Donald Trump, to become law. 3
Despite Friday’s retreat, the broader market underscores just how far lithium prices have surged. According to Trading Economics data, the benchmark contract jumped roughly 62.8% in the last month alone, and it’s more than doubled over the past year, rising about 103%. 4
For newer investors, the “down-limit” is just the exchange’s cap on how much a contract can drop during a session. When futures hit that floor, liquidity tightens up, pushing physical buyers and sellers to rely more on spot prices. That usually stretches the gap between seemingly “cheap” paper and hard-to-find actual material.
The danger now is that Friday’s selloff isn’t just a blip. The rally has attracted momentum traders; if policy support weakens or supply returns faster than anticipated, the market could lose those gains just as fast.
Attention now turns to whether downstream buying in China will continue after the recent slump, and if miners’ stocks can hold steady once U.S. cash trading kicks off. Traders are also eyeing April 1 closely, when China’s finance ministry plans to slash VAT export rebates on battery products from 9% down to 6%. The rebate is set to be phased out completely by Jan. 1, 2027 — a timeline that fueled lithium’s earlier price surge. 5
