Australian shares in lithium companies rose on Tuesday after Liontown Resources (ASX:LTR) issued a more optimistic outlook for the lithium market at the Diggers & Dealers conference, sparking a wave of buying in the battered sector — despite weak spot prices for lithium.

Liontown shares climbed more than 4%, leading gains among peers, after CEO Tony Ottaviano pointed to improving demand for spodumene, higher operating performance from the Kathleen Valley mine, and the start of work on a planned production expansion.

The presentation was the first chance for investors to react to the news, as it was delivered after the close of the Australian market on Monday.

Optimism spread across the sector. Pilbara Minerals shares rose by more than 3%, Core Lithium gained about 4%, Liontown Resources climbed more than 4%, while IGO, Mineral Resources, Argosy Minerals, and European Lithium also posted solid gains in the range of 3% to 10%.

The rally took place amid ongoing pressure on lithium prices. Benchmark prices for lithium carbonate fell to roughly 140,000 yuan per tonne on Monday, continuing a decline of about 15% over the past month, suggesting that Tuesday’s stock gains were driven primarily by improved sentiment.

Investors also found support in expectations for growth in battery demand in China. Industry forecasts point to a seasonal pickup in battery production in August, which reduces concerns about weaker demand during the traditionally slower summer period.

The rally also reflected a hunt for cheaper assets after a sharp selloff of Australian lithium stocks in recent weeks: investors returned to the sector amid the first signs that sentiment toward battery materials may be stabilizing.

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