# Lithium Stocks Fall as Guangzhou Futures Drop and Supply Fears Grow

- URL: https://stocks.freetheai.org/news/lithium-stocks-fall-as-guangzhou-futures-drop-and-supply-fears-grow-22d1dc
- Published: 2026-10-13T04:27:08Z
- Category: commodities; sentiment: bearish; impact: high
- Symbols: [ASX:PLS](https://stocks.freetheai.org/symbols/ASX-PLS)
- Written by our AI from expert market sources across the web for FreeTheAI Stocks, built by Vibhek Soni
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Shares of PLS Group Limited (ASX:PLS) fell over 8% today, extending a steep four-month slide that has cut the lithium producer's market value roughly in half from its June peak of $6.75. The broader lithium sector experienced sharp selling as benchmark lithium carbonate contracts on the Guangzhou Futures Exchange dropped 10% on Monday, while spodumene prices fell over 12% to US$1,485 a tonne.

The downturn is primarily driven by shifting supply and demand expectations rather than an immediate physical surplus. Global trade restrictions have worsened sentiment, following an agreement between European officials and China that caps Chinese hybrid car imports at 350,000 units annually, well below current levels. China also plans to trim export tax rebates on new energy vehicles starting in 2027, while domestic retail vehicle sales dropped 12% year-on-year in September. Additionally, regulators in China recently resumed the environmental approval process for CATL's Jianxiawo mine, raising prospects that a site representing up to 5% of global lithium capacity could soon restart operations.

Investors are monitoring whether Chinese inventory drawdowns and oversold market conditions lead to a short-term rebound. Key factors to watch include the final regulatory decisions regarding the Jianxiawo mine, upcoming quarterly ore arrivals from Australia and Zimbabwe, and whether Chinese electric vehicle demand stabilizes over the coming months.

## Key points

- PLS Group Limited (ASX:PLS) stock has halved over four months to $3.10 following a 10% drop in Chinese lithium carbonate futures.
- New European import caps on Chinese hybrid vehicles and reduced tax rebates in China have heightened demand concerns.
- Environmental approvals resumed for CATL's Jianxiawo mine, which accounts for roughly 4% to 5% of global lithium supply.
- Chinese retail sales of new energy vehicles declined 12% year-on-year in September to 1.141 million units.

## Questions and answers

### Why are PLS Group shares falling?

PLS Group shares are falling due to a sharp drop in lithium futures, weaker Chinese vehicle sales, trade caps on Chinese hybrid vehicle exports to Europe, and potential supply additions from restarting mines.

### What is happening to global lithium prices?

Guangzhou lithium carbonate futures fell 10% on Monday and are down over 37% since early September, while Australian spodumene prices declined 12.4% to US$1,485 per tonne.

### Could the Jianxiawo mine restart operations?

Chinese regulators resumed the environmental approval process for CATL's Jianxiawo mine on October 8, which could return 4% to 5% of global lithium supply to the market if reopened.