A surge limit in the afternoon! Australia suddenly announces a major positive development! The 13 trillion-dollar sector is experiencing a full-scale breakout!

Lithium batteries have shown sustainability!

On the afternoon of March 27, Ganfeng Lithium’s A-shares hit the daily limit, and its Hong Kong shares surged over 12%, reaching HKD 76.35 per share. Haike Xinyuan, Chuaneng Power, Tianyuan Co., Ltd., Shida Shenghua, Weiyuan Co., Ltd., and Yongshan Lithium also hit the daily limit, with nearly 30 stocks in the entire sector once hitting the daily limit. According to statistics, the total market value of lithium battery concept stocks in A and B shares reached 13.6 trillion yuan.

Some analysts believe that the demand for lithium batteries is fully exploding due to high oil prices, with global lithium battery orders flooding into China. Additionally, the supply side is exceptionally weak; no one expected that Australia, a super mining giant, might face a halt due to diesel supply issues.

It is worth noting that today, non-ferrous metals performed well overall, with gold and silver both recording good gains, and lithium carbonate also performing very strongly. Meanwhile, the U.S. dollar index has seen a significant drop.

Lithium batteries continue to explode

Following yesterday’s explosion, lithium batteries surged again this afternoon. Hong Kong lithium battery stocks continued to strengthen in the afternoon, with Ganfeng Lithium rising over 12%, Tianqi Lithium rising over 7%, Zhongchuang Xinhang rising over 6%, BYD rising nearly 5%, and CATL rising over 3%.

A-shares ignited the entire sector after Ganfeng Lithium hit the daily limit. Dinlong Co., Ltd. and Haike Xinyuan both hit the daily limit with a 20% increase, Haicheng Pharmaceutical, Tianhua New Energy, and Huasheng Lithium Electric all rose over 10%, while stocks like Hangzhou Electric, Tibet Everest, Shengxin Lithium Energy, Dandong South, and Shida Shenghua also hit the daily limit, with nearly 30 stocks in the entire sector hitting the daily limit or rising over 10%.

Some brokerages believe that the demand for lithium minerals is already on the verge of explosion, while the weak supply is leaking everywhere. The demand for lithium batteries is fully exploding due to high oil prices, with global lithium battery orders flooding into China. Scenarios such as energy storage, new energy passenger vehicles, and new energy heavy trucks all clearly feel the vigorous new demand. This part constitutes future demand growth.

Based on the experience of the Russia-Ukraine conflict, it is expected that in two months, specifically in May, domestic production expectations will be clearly revised upwards, and the quantity will be set. Meanwhile, the supply side is exceptionally weak; no one expected that Australia, a super mining giant, might face a halt due to diesel supply issues.

In the past 10 years, Australia has closed 4 refineries, leaving only 2 domestically. Nearly 90% of refined oil relies on imports. Diesel is mainly imported from Singapore, South Korea, and China. However, since the Middle Eastern war, Asian countries have found it challenging to secure refined oil supplies, let alone export to supply Australia. At least 6 fuel ships (mainly including diesel) have been canceled or delayed. Australia’s oil inventory is only about one month, the lowest level among International Energy Agency member countries, and the ongoing war will lead to a crisis in Australia’s fuel supply.

Australian iron ore producer Fenix announced that due to limited diesel supply caused by the war in Iran, its mining operations have begun to be affected, forcing a reduction in some business activities. The diesel consumption in Australia’s mining industry accounts for 30% of domestic use, with regional diesel reserves varying, and overall inventory lasting 15-30 days. In terms of output value, the importance of lithium minerals ranks below coal, iron ore, and gold, and is not a priority for supply protection. Therefore, Australia’s lithium output, which accounts for 30% of global supply, may shrink in the short term or even face production halts.

The U.S. dollar index is an important guide

On March 27, lithium carbonate futures also performed strongly, soaring over 6% in the afternoon. Other non-ferrous commodities also performed well. Spot gold broke through USD 4,470 per ounce, rising over 2% intra-day. Spot silver touched USD 70 per ounce, rising 3% intra-day. Meanwhile, the U.S. dollar index began to weaken. Analysts believe that the U.S. dollar index will be the most important investment guide in the future.

Currently, the situation in the Middle East is overturning Wall Street’s optimistic expectations for the U.S. dollar. The Bloomberg Dollar Index has risen over 2% since March and is expected to achieve its best monthly performance since July of last year. This shift is due to a surge in safe-haven funds and soaring oil prices weakening the market’s bets on Fed rate cuts. However, this round of gains has also raised questions about the long-term status of the dollar. By 2025, the Bloomberg Dollar Index is expected to decline by about 8%, marking the largest drop since 2017, primarily due to market expectations of ongoing Fed rate cuts and a growing discussion on “de-dollarization.”

Deutsche Bank warns that the Middle Eastern war is testing the dollar’s status as the currency for oil trade settlements and may accelerate the shift to other currencies. Additionally, if high oil prices continue to drag down the global economy, market expectations for Fed rate cuts may be reignited, which could lead to a weaker dollar. Goldman Sachs and Morgan Stanley both believe that increasing economic concerns will suppress the dollar. Although firms like TD Securities and Manulife Investment Management have closed some dollar short positions, they still expect the dollar to depreciate in the medium term, with the euro likely to appreciate. However, regardless, the dollar’s decline will benefit the performance of non-ferrous metals.

(Source: Securities China)