The lithium battery industry is experiencing a cyclical upturn—only by selecting the right stocks can investors truly profit.

Anode materials: Currently, natural graphite and artificial graphite dominate the market; the next-generation material is silicon-based. Key players include BTR (Beiteer), Putailai, Shanshan Co., and Hitachi Chemical. Separators: These fall into three categories—dry-process base films, wet-process base films, and coated separators. Leading domestic manufacturers are Enjie Co., Ltd., Starlight Materials, JINLI New Energy, and Sinoma Technology. Electrolytes: While conventional organic electrolytes remain prevalent, companies are also developing next-generation solid-state electrolytes. Tianqi Materials, CAPCHEM, and Guotai Hua Rong hold dominant positions domestically. Batteries are segmented into three major areas: power batteries, energy storage batteries, and battery recycling. Power batteries are used in new-energy vehicles, with mainstream chemistries being ternary (NCM/NCA) and lithium iron phosphate (LFP); emerging technologies include sodium-ion and solid-state batteries. Industry leaders include CATL, BYD, LG Energy Solution, CALB (China Aviation Lithium Battery), EVE Energy, and NARDA Power Source. Additionally, as the first generation of new-energy vehicle batteries reaches end-of-life, lithium battery recycling is becoming increasingly critical. GEM (Green Eco-Manufacture) is the leading domestic firm specializing in resource recovery from retired batteries. 3. Performance of industry leaders across segments Reviewing recently released annual reports and earnings forecasts across the entire value chain reveals clear signs of industry-wide recovery—but performance varies dramatically across segments and among firms of differing competitive positions. Some companies are thriving amid the upturn, while others remain mired in difficulties: some report profits exceeding RMB 10 billion with year-on-year growth doubling, whereas others post losses exceeding 100% year-on-year. Lithium and cobalt resources: In 2025, lithium carbonate staged a dramatic V-shaped rebound: prices bottomed at RMB 58,000 per ton in June—the midyear low—and surged to RMB 120,000 per ton by year-end. Amid this roller-coaster price movement, lithium miners’ financial results diverged sharply. Tianqi Lithium and Ganfeng Lithium—once dubbed the 'twin titans of lithium mining'—both turned profitable in 2025. Tianqi Lithium achieved a net profit of RMB 460 million, up 107% year-on-year—a rebirth following its painful restructuring. The long-standing 'pricing mechanism mismatch' that had weighed heavily on the company was finally resolved, enabling it to fully capture upside from rising lithium prices. Additional gains came from surging investment returns from SQM and foreign exchange gains due to AUD appreciation, collectively driving the company back to profitability. Ganfeng Lithium also posted a net profit of RMB 1.6 billion, up 178% year-on-year. Yet closer inspection reveals its non-recurring net profit was actually a loss of RMB 385 million. So where did the reported profit come from? The answer lies in capital-market activities. As disclosed in its official announcement, the appreciation of Pilbara Minerals shares held by Ganfeng generated approximately RMB 1.03 billion in fair-value gains…

Stock Investment Logic #6: Valuation Model for Cyclical Stocks Driven by Supply-Demand Dynamics—Using the Lithium Industry as an Example

Based on current sequential inventory drawdowns and transparent forward-looking variables, the near-term inventory reduction trend over the coming months is likely to persist—albeit with some volatility. The only additional variable worth discussing is the Xiangyu lepidolite mine. Although reports suggest imminent resumption of operations, regulatory approvals—including environmental impact assessments—are still pending; even tailings dam-related procedures have yet to commence. Given typical approval timelines, resumption of production before 2026 appears highly unlikely. In short, inventory analysis indicates that lithium supply chains will face mounting pressure in 2026 due to unexpectedly strong demand. Price Expectations Gap Between Commodities and Equities Clear supply-demand and inventory analysis alone cannot directly determine equity trading strategies. Commodity prices reflect short-term supply-demand imbalances, whereas stock prices reflect the present value of a company’s expected future profits. The principle is straightforward: even a one-month supply-demand deficit can trigger immediate price spikes in futures markets (e.g., the collapse of SHFE pork futures contracts 2603 and 2605 in Q1 this year, driven by extreme oversupply; later-dated contracts like 2607 and 2609 were comparatively less affected). In contrast, stock valuations hinge on discounted future earnings—so a single month’s surge in profits has minimal impact on valuation. Meaningful equity re-rating requires sustained, structural shifts in supply-demand dynamics—only when the market becomes convinced that the underlying fundamentals have fundamentally reversed can a broad-based rally emerge. Of course, A-share investor sentiment tends to be volatile, characterized by momentum-driven buying and selling. Even absent significant valuation changes, such sentiment swings often generate substantial price fluctuations. Regarding lithium carbonate futures, given current data pointing to persistent inventory drawdowns, the author has taken a long position in LC2701 futures while simultaneously purchasing LC2701 put options as downside protection—capping potential losses while capturing price elasticity. More aggressive traders may opt for LC2701 call options to leverage upside exposure. (This strategy was adopted because earlier 'strong reality / weak expectations' conditions created a contango (or discount) structure—making LC2701 long positions relatively inexpensive; that discount has since been largely eliminated.) For lithium mining equities, however, the central question is whether the current 'strong reality / weak expectations' dynamic can rapidly evolve—under accelerating inventory drawdowns—into 'strong reality / neutral expectations', or even 'strong expectations'. Only once the market believes the supply-demand structure has genuinely shifted will a new round of equity re-rating be triggered. It must also be emphasized that equities trade on *future* earnings expectations. Once all favorable expectations have been fully priced in—and valuations pushed to extremes—no further positive catalysts remain to drive valuations higher. This phenomenon—commonly termed 'buy the rumor, sell the news'—often manifests as…

Argus raises Albemarle stock price target on lithium recovery outlook

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Argus raised Albemarle's price target to $230 on expectations of lithium pricing recovery driven by strong EV battery demand. Analysts maintain a Buy rating, forecasting $9.51 EPS for fiscal 2026 as shares outperform the S&P 500.

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