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

On March 23, lithium mining stocks moved sharply. Guocheng Mining (000688.SZ) hit the daily limit, Fulin Precision (300432.SZ) surged over 10% at one point, and Dazhong Mining (001203.SZ), Yahua Group (002497.SZ), Shengxin Lithium Energy (002240.SZ) and others followed the rally.

According to reports, China Merchants Securities noted 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.

Great Wall Securities’ research report shows that by February 2026, the domestic iron phosphate lithium storage project bid 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 stated that as of January 2026, the global registered electric vehicle (EV) power battery installed capacity was 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) led with 32.5 GWh of installed capacity and a 45.2% market share; BYD (002594.SZ) ranked second with 9.9 GWh, with rapid growth in overseas installations; CNEV (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 declined to 12.0%.

Bojun Li from Morgan Asset Management said that the lithium battery industry chain has been adjusting since Q4 2021. Based on industry patterns, a long-term downward cycle of about five years may be sufficient, and the turning point in supply-demand dynamics is expected to occur 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 repeatedly 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 reversal of expectations may then become inevitable.