Lithium Prices Stage Strong Reversal: A Signal to Re-anchor Valuations Across the New Energy Supply Chain
Lithium Price Rebounds Strongly: A Key Signal for the Re-anchoring of Valuations Across the New Energy Industry Chain
On the morning of March 25, data from Shanghai Metal Exchange (SMM) showed that the spot price of battery-grade lithium carbonate surged by RMB 6,100/ton in a single day—to RMB 155,950/ton—a 4.1% increase. This marks a rare surge since the beginning of 2024 and—more significantly—ends an 11-week consecutive period of sideways decline that began at year-end. Unlike previous minor rebounds, this sharp jump occurred against a macro backdrop of broad-based strength across green-power stocks (e.g., Huadian Liaoning Energy posted eight consecutive trading limits; over ten power-generation stocks hit daily limits) and sustained momentum in computing-power and optical communication themes—creating a pronounced cross-sector resonance between “New Energy” and “Technology.” Market logic is quietly shifting: lithium price stabilization and recovery are no longer short-term sentiment fluctuations but rather a landmark inflection point signaling the practical commencement of trading activity around the “Second Growth Curve” of new energy.
Supply-Demand Rebalancing: A Structural Turning Point Behind the Price Reversal
Lithium prices declined persistently from H2 2023 through early 2024, driven primarily by dual pressures—supply-side oversupply and temporarily sluggish end-demand. On the supply side, concentrated capacity ramp-ups from Australian spodumene mines and South American brine extraction projects, coupled with high operating rates at many domestic lithium salt producers, intensified market saturation. On the demand side, slowing marginal growth in new-energy vehicle (NEV) sales—and intensified automaker price wars suppressing battery procurement willingness—prompted midstream battery makers to proactively de-stock, thereby markedly decelerating upstream lithium salt purchasing rhythms.
Yet current signals indicate a qualitative shift in the supply-demand landscape. According to the latest survey by Baichuan Intelligence, domestic mainstream battery manufacturers’ production planning for March rose 12–15% month-on-month, with energy storage battery output surging 28%—driven mainly by recovering overseas residential storage orders and accelerated domestic utility-scale storage tendering (State Grid’s March tenders rose 45% YoY). Crucially, landed costs for upstream lithium concentrate have approached RMB 120,000/ton, while current spot processing margins for lithium salt producers are negative—strengthening the willingness of smaller and mid-sized players to cut output or halt production altogether. SMM monitoring shows lithium salt plant operating rates rebounded 7 percentage points from February’s lows—but remain near their lowest level in the past year, suggesting initial effectiveness in capacity rationalization. The recent price surge, therefore, reflects a confirmed rebalancing, jointly underpinned by rising cost floors and improving demand fundamentals.
Valuation Re-anchoring: From “Profit Concerns” to “Growth Realization”
Lithium price stabilization carries implications far beyond a single commodity’s volatility—it fundamentally reshapes the market’s valuation anchor for the entire new-energy sector. Over the past six months, midstream lithium-ion battery material companies have broadly faced a “volume-up, profit-flat” dilemma: shipment volumes continued rising, yet falling lithium prices triggered inventory write-downs and compressed processing fees—leading to Q1 earnings forecasts widely missing expectations and dragging down the sector’s overall valuation. Per Wind data, the SWDA Battery Index’s trailing-twelve-month (TTM) P/E ratio fell as low as 22x—placing it at the 15th percentile over the past three years.
This price reversal will directly trigger a three-pronged valuation recovery logic:
First, lithium mining firms’ profitability outlook improves markedly. For instance, if lithium prices stabilize above RMB 155,000/ton, GANFENG Lithium and TIANQI Lithium could see Q2 gross profit per ton rise 30–40% quarter-on-quarter—reversing their prior passive strategy of “conceding margins to retain market share.”
Second, battery manufacturers’ cost pressure eases materially. Leading players such as CATL and BYD are expected to see Q2 battery procurement costs fall ~2–3%, and with automaker price wars easing, battery segment gross margins may expand 1–2 percentage points sequentially.
Third, midstream material profitability gains visibility. Cathode material producers’ inventory cycles shorten, and their bargaining power on processing fees for products like LFP and NCM precursors strengthens—prompting markets to re-price these firms based on their “technology premium,” not merely as passive “cost followers.”
Notably, this round of recovery does not simply revert to the high-lithium-price logic of 2022; instead, it is deeply intertwined with the “Second Growth Curve.” Accelerated deployment of integrated photovoltaic-storage-charging (PV-Storage-Charging) projects (e.g., Huawei Digital Power’s 2-GW PV-storage project signed in Anhui), faster industrialization of solid-state batteries (e.g., Weilan New Energy’s semi-solid-state batteries now powering NIO ET7 vehicles), and surging demand for novel energy storage solutions for grid peak-shaving (independent storage plant utilization rates in Guangdong and Shandong rose 65% YoY in March) collectively form new pillars of lithium demand. Lithium is no longer just “fuel for EVs”—it has evolved into an “energy regulation medium” within next-generation power systems.
Cross-Sector Resonance: The Renewed Convergence of New Energy and Technology Themes
The market’s decision to amplify the lithium price signal at this juncture is less an isolated event than a concrete expression of a broader macro-level reallocation of capital. On the morning of March 25, the Shanghai Composite Index reclaimed the 3,900-point level, while the ChiNext Index rose 1.26%. More tellingly, sectoral leadership revealed strong interconnectivity: Green Power (+4.2%), Optical Communications (+3.8%), and Lithium Battery Materials (+3.1%) ranked among top gainers—while traditional energy sectors such as Oil & Gas and PV Equipment posted losses. This “abandoning the old, embracing the new” structure confirms capital is shifting from “zero-sum competition” toward “incremental narrative-driven investment.”
Particularly worth deeper reflection is the unexpected strength of so-called “token-related concept stocks” (e.g., ORAY and ERLIU-SEN hit daily limits)—which, superficially, appears to be AI-theme diffusion but, in reality, aligns with the foundational logic of intelligent new energy: large-scale AI model training requires massive green electricity supply; green electricity absorption depends critically on energy storage systems for peak shaving; and high-performance lithium batteries lie at the core of modern storage. An implicit, closed-loop industrial chain—“AI Computing Power → Green Electricity Supply → Lithium-Based Energy Storage”—is now taking shape. When lithium pricing becomes the “value adhesive” binding this loop together, its upward movement acquires systemic significance transcending mere commodity attributes.
Risk Alert: Beware of Short-Term Overheating and Geopolitical Disruptions
Of course, optimism must be tempered with rational scrutiny. The current lithium price surge remains in its early stage; its sustainability hinges on two key factors: first, whether end-market demand recovery can be consistently validated—especially NEV sales and grid-connected energy storage data for April–May; second, global supply-chain stability. Although the Iran situation has not yet disrupted shipping through the Strait of Hormuz (China COSCO Shipping Energy stated it is “still assessing security conditions”), geopolitical risk premiums are already embedded in commodity pricing. Moreover, if lithium prices rise too rapidly, battery makers may initiate another round of procurement hesitation—potentially dampening near-term demand release.
In summary, the battery-grade lithium carbonate price’s single-day 4.1% surge serves as a critical milestone marking the new-energy industry chain’s successful navigation across its cyclical trough. It signals a decisive shift in market focus—from “pace of capacity rationalization” to “intensity of new-demand realization”—and a fundamental re-anchoring of valuations: away from “worst-case-scenario floor estimates” and toward “reasonable central values anchored in growth trajectories.” For investors, rather than obsessing over whether lithium prices have truly bottomed, the priority should be identifying enterprises authentically positioned along the Second Growth Curve: material suppliers holding patent moats in solid-state battery electrolytes; system integrators deeply embedded in utility-scale EPC projects; and energy operators leveraging green-power advantages to build integrated PV-storage-charging networks. In the second half of the new-energy era, competitive advantage lies no longer in scale alone—but in value density and ecosystem integration capability. And this lithium price reversal? It is the starting pistol for that new race.