Lithium prices in China surged on Monday after Beijing said it would scale back value-added tax (VAT) export rebates for battery products, prompting expectations that exporters will accelerate overseas shipments ahead of the policy change.
The most-active lithium carbonate contract on the Guangzhou Futures Exchange closed at its daily limit, rising 9% to 156,060 yuan ($21,700) per metric ton, its highest level since November 2023.
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China’s finance ministry said on Friday that VAT export rebates for battery products would be reduced to 6% from 9% starting in April, before being rolled back entirely from Jan. 1, 2027. While the rebate does not directly apply to lithium carbonate, analysts said the policy is likely to boost near-term battery production as exporters move to ship products before the changes take effect, lifting demand for lithium.
Analysts at Orient Securities said the move is expected to support battery output in the short term, while also reflecting Beijing’s longer-term effort to rein in what it has described as excessive, involution-style competition in the battery and materials sectors.
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Lithium prices in China have been climbing since mid-2025 and are now up about 167% from last year’s lows. The rally has been underpinned by policy signals aimed at curbing overcapacity, supply disruptions such as the suspension of production at battery giant CATL’s Jianxiawo lithium mine, and expectations of rising demand from the energy storage sector.
Market participants said the latest policy adjustment added momentum to the rally, as traders positioned for tighter near-term supply conditions amid stronger battery production and export activity.