LTHM - China lithium investigation set to cut ~10% of global supply

Lithium producers including Albemarle ( NYSE: ALB ), Livent ( LTHM ) and Lithium Americas ( LAC ) are on watch Monday after China shut down a lithium production hub responsible for ~10% of the world's supply after an environmental probe found mining violations.

Every stock in the Global X Lithium & Battery Tech ETF ( NYSEARCA: LIT ) is indicated higher, led by FREYR Battery ( NYSE: FREY ) +6.6% , ahead of the stock market open.

Some lithium operations in Yichun, Jiangxi province, reportedly were halted after Beijing officials arrived over the past week to investigate alleged violations at lithium mines.

The shutdown threatens 8%-13% of global supply, according to various analyst estimates, although it is not known how long the immediate shutdowns will last.

Goldman Sachs analysts have said demand for lithium from China's auto industry has fallen by more than half in recent months, which will drive a further slump in lithium prices beyond the 30% drop from last year's peak.

Shares of most lithium producers have dropped sharply in recent days following reports that big Chinese battery maker CATL has offered discounts to some automakers, reflecting a downturn in lithium prices .

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