Institutions Say Inflection Point in Lithium Battery Supply-Demand Pattern Is Imminent, Guocheng Mining Hits Daily Limit

(Source: Caixin)

CICC International reports that in March, the lithium battery industry chain has fully rebounded in production. Coupled with the implementation of the “trade-in” policy after the holiday and new vehicle launches, lithium battery demand is expected to remain strong throughout the year.

On March 23, lithium mining stocks showed unusual movement, with Guocheng Mining (000688.SZ) hitting the daily limit, Fulin Precision (300432.SZ) surging over 10% at one point, and other stocks like Zhongda Mining (001203.SZ), Yahua Group (002497.SZ), and Shengxin Lithium Energy (002240.SZ) also rising.

According to the report, CICC International states that in March, the production schedule across the lithium industry chain has fully recovered. The implementation of the “trade-in” policy after the holiday and new vehicle launches are positive signals for lithium battery demand throughout the year.

Great Wall Securities’ research report shows that by February 2026, the domestic lithium iron phosphate energy storage project award capacity will reach 26.4 GWh, a year-on-year increase of 125%, and a month-on-month increase of 14%. The average bid price for 2-hour systems is 636.1 yuan/kWh, up 19.8% month-on-month.

Guolian Minsheng states that as of January 2026, the global registered electric vehicle (EV) power battery installed capacity is approximately 71.9 GWh, a year-on-year increase of 10.7%. Chinese companies continue to expand their advantages, with six Chinese firms ranking in the top ten globally, holding a combined market share of 73.3%. Among them, CATL (300750.SZ) leads with 32.5 GWh of installed capacity and a 45.2% market share; BYD (002594.SZ) ranks second with 9.9 GWh, with rapid growth in overseas installations; Zhongchuang Xin Hang (03931.HK) achieved the fastest growth among the top ten with a 51.5% year-on-year increase. In contrast, the combined market share of the three major Korean battery companies has declined to 12.0%.

Bojun Li from Morgan Asset Management states that the lithium battery industry chain has been adjusting since Q4 2021. Based on industry patterns, a long-term down cycle of about five years may be sufficient, and the turning point in supply-demand dynamics is expected in the second half of this year. Since the beginning of the year, the market has been enthusiastic about various themes. During this period, although the fundamentals of the lithium battery sector have continued to strengthen and companies’ production plans have hit record highs, stock prices have not reflected this. This short-term divergence from long-term prosperity is a typical “misjudgment.” As detailed financial reports are released intensively in mid to late March, the market will realize the strong performance of the lithium battery sector in Q1 of this year, and the anticipated turnaround may then become inevitable.