Signs that China is re-focusing its attention on environmental regulation have injected fresh volatility into commodity markets, as traders position for the potential return of intermittent crackdowns amid the economy’s reopening.
Ore-processing operations in China’s top lithium production hub, Yichun, were ordered to halt output as investigators probed alleged environmental infringements at lithium mines, Bloomberg reported.
The move threatens around 8 per cent to 13 per cent of global supply of the battery mineral, and adds further uncertainty to Chinese carbonate prices, which last week hit a 12-month low of 392,500 yuan per tonne. That marks a swift 30 per cent decline from the record high struck in November.
“Traders in the lithium market are becoming increasingly concerned about a supply shock,” said Daniel Hynes, senior commodity strategist at ANZ. Meanwhile, iron ore prices fell sharply after authorities ordered output cuts at steel production hub Tangshan amid forecasts of heavy air pollution, sparking concerns about demand for the bulk commodity.
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