Lithium carnage: Why PLS has halved in four months as peers MinRes, IGO and Liontown tumble
PLS Group has halved in four months as lithium’s comeback unravels, with an EU-China deal, returning supply and 2027 demand jitters to blame
.jpg)
Source: Shutterstock
Mentioned
KEY POINTS
- Returning supply and 2027 demand fears has sent GFEX lithium carbonate down roughly 50% from its May peak.
- Monday’s slide followed an EU-China cap on Chinese hybrid imports and a cut to NEV export rebates, while CATL’s Jianxiawo mine, 4-5% of global supply, is back in the approval process.
- Bellwether PLS Group has halved since hitting a record $6.68 on 1 June, swinging from a 50% year-to-date gain to a 30% loss.
There’s never a dull moment in lithium. Bellwether PLS Group staged a euphoric comeback, surging over 500% from a low of $1.06 in June 2025 to a record $6.75 by June 2026. Four months later, the stock has halved to ~$3.15.
Below, we recap the recent run of events and where the sector might go from here.
The lithium plunge
The short version is that the recent halving is mostly an expectations trade, driven by returning supply and fears about 2027 demand, rather than a physical glut.
The most active lithium carbonate contract on the Guangzhou Futures Exchange peaked at a 33-month high of 209,880 yuan a tonne in May and has been in a downward spiral ever since. The selloff gathered pace in September, with prices down more than 37% since the start of that month. On Monday, the contract plunged another 10% to 104,740 yuan, extending an eight-week losing streak. It’s now at its weakest level since 17 December 2025, roughly half its May peak.
Spodumene (6%, FOB Australia) has followed suit, falling 12.4% on Monday to US$1,485 a tonne and ~31% over the past three months.
The latest leg lower came after the EU and China struck a landmark trade agreement capping imports of Chinese hybrid and plug-in hybrid vehicles at 350,000 cars a year, well below this year’s run rate of ~650,000. Separately, China said on Monday it would cut its export VAT rebate for new energy vehicles (NEVs) from 13% to 9%, effective 1 April 2027.
Then there’s CATL. Its Jianxiawo mine, China’s largest lithium mine by capacity, has been shut since its licence expired in August 2025. Lithium stocks had already bottomed by June 2025, but the closure was arguably the catalyst for a sharp move higher, with PLS Group jumping 30.5% between 8 and 11 August. Regulators revoked the mine’s environmental approval in September 2025, but the approval process resumed on 8 October. Jianxiawo represents ~4–5% of global supply at full capacity, so a restart would be fairly bearish for prices.
Other key catalysts over the past few months include:
Other supply: Australian restarts at Bald Hill and Finniss add to earlier resumptions at Ngungaju, Pioneer Dome and Mt Marion. Ore arrivals at Chinese ports are also expected to rise in Q4, with more coming from Zimbabwe and Australia.
Inventories: Stocks are falling, not building. China’s lithium carbonate inventories fell about 44% from roughly 203,000 tonnes in early June to 113,600 tonnes by end-September. However, a mid-September methodology change by data provider SMM sharply lifted reported inventory and rattled traders.
NEV sales: China’s NEV retail sales fell 12% year-on-year in September to 1.141 million and are also down 12% year-to-date, partly because buyers have paid a half-rate purchase tax since January. Exports are propping up the headline numbers, with wholesale sales up an estimated 12%.
Staircase up, elevator down
It’s taken just five months to unravel a little over half of the comeback rally for most lithium stocks. The average name below is down 14% over the past three months and 10.7% year-to-date, but up 24% over the past 12 months. PLS Group is still up ~180% from its June 2025 low. Global Lithium hasn’t been fazed thanks to a $1.15-per-share cash takeover offer from UAE-based Titan Lithium, while large caps like MinRes and IGO are clinging to small gains over the past year.
Ticker | Company | % Chg | Price | 3 Months | YTD | 12 Months |
|---|---|---|---|---|---|---|
VUL | Vulcan Energy Resources | -9.7% | $1.24 | -56.6% | -71.9% | -77.3% |
PLS | PLS Group | -6.5% | $3.15 | -31.5% | -25.0% | 24.5% |
MIN | Mineral Resources | -5.4% | $46.42 | -21.9% | -14.7% | 9.9% |
IGO | IGO | -3.9% | $5.66 | -16.4% | -30.9% | 8.4% |
LTR | Liontown | -3.7% | $0.72 | -50.0% | -54.0% | -25.1% |
CXO | Core Lithium | -3.3% | $0.22 | -12.7% | -19.1% | 111.9% |
EUR | European Lithium | -1.4% | $0.37 | 9.0% | 135.5% | 46.0% |
PMT | PMET Resources | -1.3% | $0.38 | -27.9% | -37.0% | -9.6% |
GL1 | Global Lithium Resources | -0.5% | $1.00 | 107.3% | 57.9% | 148.8% |
DLI | Delta Lithium | 0.0% | $0.17 | 0.0% | -25.0% | -13.2% |
Data as at 2:00 pm AEDT, Tuesday 13 October 2026
Still, it’s absolute carnage out there, and it shows how much leverage is built into the sector. PLS swung from a $257 million net profit in FY24 to a $196 million loss in FY25, then back to a $526 million profit in FY26.
Where to from here?
If the last cycle is any guide, the bottom will only be obvious in hindsight. Lithium prices and stocks bottomed in late June 2025, just two months after Citi told clients to go short. The fundamentals didn’t dramatically improve at the lows. Instead, the turn came largely off the back of Beijing’s “anti-involution” campaign and the permitting problems at Jianxiawo, which Macquarie dismissed at the time as a case of the “tail wagging the dog”.
Lithium stocks look brutally oversold, and a short-term bounce is starting to look overdue. Meanwhile, Chinese inventories are drawing down after the week-long National Day holiday and demand is holding up, but sentiment has soured and Jianxiawo’s approval process is back underway. The broader backdrop isn’t helping either, with the AI trade rolling over and South Korea’s KOSPI down around 7% today and almost 15% over the past four sessions. Until prices bottom, there’s not much to do but wait.
