Lithium doubters are bracing for an imminent short squeeze as traders scramble to cover aggressive bets against the battery material, but analysts warn the rally could be short-lived unless more supply is curtailed.

The frantic repositioning follows reports on Wednesday that Chinese electric vehicle battery maker CATL suspended production from its Jiangxi lepidolite mine. The operation, which accounts for roughly 5 per cent of global primary supply, was on track to become the world’s fifth-largest lithium mine by volume.