Author: Ling Feng, Editor: Shui Jing
Lithium battery materials are once again entering an epic growth cycle.
According to statistics from the 24chao Industry Research Institute (TTIR), 11 leading listed companies in the lithium battery materials sector, covering lithium carbonate, ternary precursors, cathode and anode materials, lithium battery separators, and electrolytes, achieved a combined net profit attributable to shareholders of approximately 21.4 billion to 24.2 billion RMB in the first half of 2026, representing a year-on-year increase of about 295% to 348%.
Among them, the two Chinese lithium mining giants, Ganfeng Lithium (002460.SZ) and Tianqi Lithium (002466.SZ), took the top spots on the profit scale and profit growth charts, respectively. The former achieved a profit of 3.65 to 4.6 billion RMB in the first half of the year, while the latter saw its net profit surge by 3,276% to 4,935% year-on-year.
The explosive, collective upward growth of the industry sends a very strong signal that it is "climbing out of the trough."
Undeniably, on a global scale, China's entire lithium battery industry chain is already far ahead, dominating the world in terms of production capacity scale, shipment volume, and technological level.
Currently, Chinese battery materials account for over 90% of the global market share, but the fierce involution competition has not ended. Unlike the midstream where CATL (Contemporary Amperex Technology Co., Limited) dominates alone, the upstream materials track is relatively fragmented. When the industry gains momentum, industry players aggressively expand production, and external capital rushes in. The soaring capacity further exacerbates the risk of a downturn.
After experiencing an epic super cycle, although the lithium battery materials industry has won a short-term battle, it is still too early to claim victory in the entire war.
Overnight Turnaround: Explosive Performance Surge
This is not just a feast for the industry leaders, but a collective carnival.
According to incomplete statistics, nearly 50 listed companies in the A-share lithium battery industry chain have released mid-year report forecasts that exceeded expectations. According to brokerage statistics, over 90% of these companies achieved expected profit increases, turned losses into profits, or significantly reduced losses. The recovery pattern of simultaneous volume and profit growth across the entire industry chain is very evident.
In fact, signs of recovery in the lithium battery industry have been traceable since the second quarter of 2025. For instance, three sets of data previously compiled by the 24chao Industry Research Institute (TTIR) show:
1. In the first half of 2025, the total "lithium battery business revenue" of Chinese listed lithium battery companies reached approximately 537.995 billion RMB, a year-on-year increase of 14.95%. This growth rate was 35.16 percentage points higher than that of the same period in 2024 (which saw a year-on-year decrease of 20.21%).
2. In the third quarter of 2025 (July to September), the total operating revenue of major Chinese listed lithium battery companies was 374.252 billion RMB, a year-on-year increase of 18.62%; the combined net profit reached 34.397 billion RMB, a year-on-year increase of 67.18%.
3. In the fourth quarter (October to December), the combined net profit attributable to shareholders of 68 listed lithium battery companies ranged from 7.568 billion to 15.182 billion RMB, representing a year-on-year increase of approximately 178.83% to 257.95%.
The reason behind this feast stems from the continuous recovery of prices.
Upstream lithium resources took the lead in breaking the ice. In 2025, lithium carbonate experienced a "U-shaped" trend of a deep squat followed by a strong rebound. The price of battery-grade lithium carbonate rose from 73,000 RMB/ton to approximately 120,000 RMB/ton. Entering January 2026, it increased from 119,000 RMB/ton at the beginning of the month to 152,500 RMB/ton at the end of the month, a surge of 28.15%.
Subsequently, affected by Zimbabwe's export ban and the license renewal of mines in Jiangxi, the price of lithium carbonate directly surged to a high of 200,000 RMB/ton in May, after which it fluctuated downward to around 145,000 RMB/ton.
The rise in lithium carbonate prices has unleashed the per-ton profitability of lithium salt enterprises. Qinghai Salt Lake Industry (000792.SZ) forecasted a mid-year net profit of between 6 billion and 6.3 billion RMB, an increase of 1.31 to 1.43 times; Yahua Group (002497.SZ) is no exception, expecting a net profit of 1.1 billion to 1.3 billion RMB in the first half of the year, a surge of 7.1 to 8.57 times.
It is not just lithium salts; the prices and profitability of core main materials such as lithium hexafluorophosphate (LiPF6), electrolytes, cathode materials, and separators are all recovering simultaneously.
The price of lithium hexafluorophosphate has been quite volatile. In the first half of 2025, it was at a freezing point of 51,700 RMB/ton, surging to 180,000 RMB/ton by the end of 2025 before falling back. Entering 2026, it hit a high of 165,000 RMB/ton at the beginning of the year, dropped to 96,000 RMB/ton by the end of April, and then rebounded from the bottom. It currently maintains a price level of around 110,000 RMB/ton.
Industry analysis suggests that when the price of lithium carbonate reaches 200,000 RMB/ton, the cost of LiPF6 is about 100,000 RMB/ton. In the first half of this year, LiPF6 as a whole remained in a profitable range and rebounded significantly compared to last year, leading industry players such as Do-Fluoride and Tinci Materials out of the trough.
Changes in the core solute have driven synchronous fluctuations in the electrolyte. Currently, the median price for mainstream ternary power types is about 32,000 RMB/ton, and for lithium iron phosphate (LFP) types, it is 31,000 RMB/ton; this represents a recovery of over 50% from the 2025 low point (10,000-20,000 RMB/ton). It is currently in a consolidation period following simultaneous increases in volume and price.
Cathode materials are no exception; LFP cathode materials closely follow the price movements of lithium carbonate. As the overall trend of lithium carbonate is upward, coupled with the increase in processing fees, cathode materials have also risen accordingly. The price of LFP reached a low of 45,000 RMB/ton and a high of 66,000 RMB/ton.
In the first half of 2026, lithium battery separators also began to strengthen, with dry-process separator prices rising to 7,000 RMB/square meter and wet-process separators reaching 11,000 RMB/square meter. Rising prices of upstream materials have pushed up separator selling prices. Meanwhile, the construction cycle for high-end ultra-thin wet-process separator production lines is as long as 1.5 years, leading to insufficient short-term supply increments, which opens up ample room for price increases. Players such as Semcorp and Sinoma Science & Technology have benefited from this.
Looking at the first half of the year, the lithium battery materials track has completely shaken off its sluggish performance and embarked on a strong reversal.
The Blade of Cycles: A Massive Collision of Supply and Demand
History repeats itself, but not in a simple manner.
How long this rebound can last might find its answer in the past cycle rotations.
Over the past decade, China's lithium battery industry has gone through three major cycles. Observed from the rearview mirror of history, the cyclical fluctuations in the lithium battery materials industry are far more intense than imagined.
First, looking at the first cycle (2015-2019), the core reason was policy-driven demand coupled with supply-demand mismatch.
In 2015, China introduced intensive support policies for the NEV (New Energy Vehicle) industry, enabling downstream demand to make the leap from 0 to 1. The price of lithium carbonate subsequently soared from 50,000 RMB/ton to 170,000 RMB/ton, a surge of up to 240%.
The core driving force in this stage was policy subsidies, while the supply side experienced a severe mismatch due to the massive flood at the Atacama Salt Lake in Chile in March 2015.
However, the good times did not last. By 2017, the continuous phase-out of domestic subsidy policies led to shrinking demand, while newly built lithium mine capacities in Australia were released in a concentrated manner, especially the expansion of the Greenbushes mine in Western Australia, resulting in severe inventory backlog. The price of lithium carbonate fell all the way from 170,000 RMB/ton to 40,000 RMB/ton by the end of 2019, a drop of 76%.
This was the first complete cycle in the lithium battery industry, where policy drove demand, capital influx caused overcapacity, and prices ultimately collapsed.
The second super upward cycle occurred from 2020 to 2022. This was the most frantic surging cycle in the history of lithium carbonate, with prices skyrocketing from 40,000 RMB/ton to 600,000 RMB/ton, a staggering increase of 1,400%.
Compared to the historical trends of any bulk commodity, such an increase is extremely rare.
In August 2020, the price of lithium carbonate hit the cycle bottom of 40,000 RMB/ton. Subsequently, driven by the global energy revolution and the "Dual Carbon" strategy, NEV demand achieved a leapfrog growth from 1 to 10. In 2021 and 2022, China's NEV sales reached 3.52 million and 6.89 million units, respectively, which were 11 and 21 times those of 2015.
However, the supply side faced a gap in capacity due to insufficient capital expenditure in the previous round, and the COVID-19 pandemic in 2020 further delayed multiple lithium mine and salt lake projects. Under the severe mismatch of supply and demand, the price of lithium carbonate triggered an epic-level surge.
The frantic market for lithium carbonate drove the entire industry into ecstasy. The price of lithium hexafluorophosphate also rose from 70,000 RMB/ton in 2020 to a historical extreme of nearly 600,000 RMB/ton in early 2022, boosting the performance of manufacturers such as Tinci Materials and Do-Fluoride.
It can be said that 2022 was the happiest year for lithium battery material players, with the entire industry making huge profits. Tianqi Lithium raked in a net profit of 24.1 billion RMB, a growth rate of up to 11 times, with an 85% gross profit margin comparable to Moutai; Hunan Yuneng's revenue increased sixfold, and its profit was three times that of the previous year.
That was a golden era belonging to upstream lithium mines and material factories.
However, the blade of cycles may be late, but it will not fail to arrive.
From 2023 to the first half of 2025, the entire industry was hit by a capacity tsunami and price collapse, entering a cruel deep bear market cycle since then.
Stimulated by sky-high prices, global capital, like sharks smelling blood, flocked from all directions, and capacity was expanded rapidly and massively.
According to incomplete statistics from the Ministry of Industry and Information Technology (MIIT), in 2022 alone, there were over 40 planned projects in the cell segment, with a total planned capacity of over 1.2 TWh and planned investments of 430 billion RMB.
In 2022, the total planned capacity of domestic lithium batteries exceeded 1.2 TWh, which was more than four times the installed volume (294.6 GWh) of that year. There were as many as 156 capacity expansion projects for the four major main materials in the midstream, with planned investments exceeding 500 billion RMB. The upstream sector set off a wave of mineral mergers and acquisitions, with capital sweeping up goods globally. Even the women's clothing brand Riboh Fashion crossed over into the lithium battery materials sector, changing its name to Puyuan Materials.
With the release of massive capacities from Chinese lepidolite and African lithium mines, the turning point appeared in 2023.
To secure orders, battery manufacturers planned capacity ahead of time, with every company wanting to capture the newly added share, leading to capacity overflow. On the flip side, the growth rate of NEV sales fell from over 50% to around 40%.
The supply tsunami collided with slowing demand, resulting in a price avalanche.
The price of lithium carbonate plummeted from 600,000 RMB/ton to 60,000 RMB/ton by mid-2025, a drop of 90%.
The price of LFP materials plunged from 173,000 RMB/ton to 34,000 RMB/ton, a drop of 80.2%. This crash led to continuous losses across the industry for over 36 months, with the average asset-liability ratio of 6 listed companies rising to 67.81%, forcing the clearance of a large amount of low-end capacity.
In 2025, electrolyte capacity reached 3.5 million tons, while market demand was only 1.2 million tons. The global capacity utilization rate was less than 40%, further widening the gap of supply-demand imbalance.
This round of deep adjustment triggered a profit retracement across the industry, with many companies turning from profit to loss. Tianqi Lithium suffered a massive loss of nearly 8 billion RMB in 2024; Dynanonic bled continuously for three consecutive years since 2023; and Tinci Materials' net profit shrank from 5.7 billion RMB (in 2022) to less than 500 million RMB (in 2024).
From the second half of 2025 to the present, the global lithium battery industry is in the third industrial cycle, which stems from the industry's continuous self-rescue.
In June 2025, the China Battery Industry Association and the China Plastics Processing Industry Association jointly issued an initiative, calling on the battery industry to shift the focus of competition from "price comparison" to "quality and innovation competition." In August, the Lithium Branch of the China Nonferrous Metals Industry Association issued a document stating that, to strengthen industry self-discipline and prevent "involution-style" vicious competition. Separator companies held symposiums and reached a consensus on price self-discipline, scientific capacity release, and suspending inefficient capacity expansion.
In January 2026, the MIIT, the National Development and Reform Commission (NDRC), the State Administration for Market Regulation (SAMR), and the National Energy Administration (NEA) jointly held a symposium to study and deploy further regulation of the competition order in the power and energy storage battery industries.
Beyond the "visible hand" of policy, the "invisible hand" of the market is also accelerating the clearance.
According to incomplete statistics, since August 2025, at least 8 major capacity expansion plans in the lithium battery materials industry have been terminated or suspended, involving total investments of up to 29.53 billion RMB.
For instance, Semcorp terminated its separator project in Malaysia (approximately 2 billion RMB); Dynanonic terminated its two major cathode projects in Qujing and Huize (totaling 440,000 tons/year, approximately 10 billion RMB); Zhongke Electric halted three major anode projects (totaling 330,000 tons/year, 10.3 billion RMB); and Yongtai Technology also canceled its 200,000-ton electrolyte project in Shaowu (950 million RMB).
In 2025, basically no large-scale new capacity was implemented, with only a few technologically leading companies having minor capacity expansion plans.
Meanwhile, the clearance process of tail-end capacity is even faster. Inefficient capacity fell into operational difficulties due to weak technological barriers, substandard environmental protection, and insufficient cost control, leading to a significant contraction in effective capacity in some segments. Stricter environmental policies and dual control of energy consumption further raised the entry threshold for the industry.
Under the collision of multiple factors, industrial prices and the overall situation have comprehensively reversed.
Profit Interception: Squeezed from Both Ends
However, what is more cruel than the cycle today is the structural imbalance in profit distribution within the industry chain.
Located in the midstream of the industry chain, material factories are "dependent on both ends," looking at the mood of mining enterprises upstream and being controlled by battery manufacturers downstream.
According to the Shenwan Level-3 industry classification, in the first half of 2022, the net profit of the battery chemicals segment (midstream material factories) reached as high as31.167 billion RMB, capturing nearly 90% of the industry's revenue in one stroke.
However, over three years, profits have gradually shifted from the material end to the battery end.
In the first half of 2025, the net profit of the battery chemicals segment plummeted to 4.941 billion RMB, with its share shrinking significantly to only one-tenth.
In contrast, in the first half of 2025, the net profit of battery enterprises rose to 36.51 billion RMB, accounting for a high proportion of 76.9%, becoming the new profit center.
The profit distribution is extremely fragmented and also extremely cruel. CATL alone raked in a net profit of 72.2 billion RMB last year, exceeding the total profits of 13 A-share listed automakers. The battery segment took about 90% of the profits of the entire NEV industry, and this 90% is highly concentrated in the hands of a few giants.
When battery companies expand capacity, material factories follow suit; when leading battery companies squeeze prices, material factories can only accept it. The "oligopoly pattern" forms "oligopolistic profits." It is worth noting that CATL alone occupies 40% of the global power battery market, and the market decisions of a single enterprise are enough to influence the entire market. In contrast, the midstream lithium battery materials pattern is relatively fragmented, with the share of leading companies generally less than 30%. For example, Hunan Yuneng, a supplier to CATL, has a global market share of 28.2%.
In the emerging energy storage track, in 2025, CATL's energy storage battery shipments also accounted for 30.4% of the global total, ranking first for the fifth consecutive year. Its ultra-large market share determines an unmatched pricing power.
Such a pattern dictates that even if prices reverse, it will not be a carnival for the entire industry, and industry differentiation remains striking. In comparison, the gross profit margin of "King Ning" (CATL) in the first half of 2026 reached as high as 24%, while that of its supplier Ronbay Technology was less than 10%. "Polarization" remains the most realistic portrayal of the current lithium battery materials industry.
This inequality in profit distribution is the deepest structural contradiction in the lithium battery materials industry. Material factories can briefly enjoy the happiness brought by tight capacity and exploding demand, but the lack of pricing power means that once supply and demand are rebalanced, profits will be squeezed again by the upstream and downstream.
A New Crossroads for the Cycle
At present, the lithium battery materials industry stands at a subtle crossroads.
On the optimistic side, new capacity on the supply side is restricted, while demand is driven by the dual engines of energy storage and power batteries, continuously strengthening the tight balance of supply and demand.
However, hidden worries are equally不可忽视 (cannot be ignored). -> However, hidden worries are equally不可忽视 -> However, hidden worries are equally impossible to ignore.
First, the midstream pattern is relatively fragmented, with the share of leading companies generally less than 30%. Even if everyone tacitly controls production, it is hard to avoid undercurrents. Once profit recovery attracts a new wave of capacity expansion, the nightmare from years ago is likely to reappear. Although the brutal adjustment of the previous round may not occur, "industry self-discipline" is not an ironclad rule, and some enterprises are still rushing against the trend.
The most aggressive in this round is Putailai (603659.SH). In March 2026, the company planned to invest approximately 2.051 billion RMB to build a 50,000-ton anode material project in Malaysia; in May, it announced an investment of 5.6 billion RMB in Sichuan to build 7.2 billion square meters of lithium-ion battery separator capacity in two phases. The first phase of the project will invest 2.6 billion RMB to form a capacity of 3.2 billion square meters; the second phase will invest 3 billion RMB to form a capacity of 4 billion square meters.
Whether the expansion of some industry enterprises will bring disturbances to industry fluctuations remains a question.
Second, energy storage is not a panacea. Research by the 24chao Industry Research Institute (TTIR) found that while China's energy storage is growing strongly, huge risks are also accelerating to gather.
Among them, the wildly surging capital is a key variable in this crisis.
First, looking at primary market data, according to statistics from the Beijing Institute of Green Finance and Sustainable Development, from 2014 to 2025, a total of 3,557 financing events occurred in the primary market of China's energy storage sector, with a disclosed total financing amount of approximately 325.1 billion RMB.
In addition, capital-rich central state-owned enterprises (SOEs) are also rushing into the market. According to incomplete statistics from Energy Storage Headlines, in 2025 alone, the number of energy storage-related enterprises newly established or funded and invested by central and state-owned SOEs reached 392, with cumulative registered capital exceeding 50 billion RMB.
Driven by strong financial support, as of now, there are about 23 unicorn enterprises in China's energy storage sector, with valuations breaking through 500 billion RMB.
Undeniably, the strong rise of energy storage in recent years is inseparable from the powerful assistance of capital. However, as more and more capital crazily rushes in, the sustainable development of the energy storage industry is facing severe impacts and challenges.
In terms of capacity, according to data from the China Investment Consulting (CIC), the planned domestic energy storage battery capacity in 2025 has exceeded 1 TWh, far exceeding the global demand expectation of about 450 GWh in 2026. Will it face the risk of overcapacity after the concentrated release of capacity in the future?
Additionally, according to incomplete statistics from the Gaogong Industry Research Institute (GGII), in the first half of 2026, nearly 20 energy storage projects were implemented in China, with planned capacity breaking through 500 GWh. The total project investment exceeded 47 billion RMB, a year-on-year increase of over 110%.
Zhongyuan Securities analysis believes that the newly put-into-operation capacity of energy storage lithium batteries in 2026 is expected to exceed 500 GWh, concentrated in enterprises such as Chuen Energy, CATL, Hithium, Envision AESC, EVE Energy, REPT Battero, and CALB. It is estimated that by the end of 2026, the total domestic capacity of energy storage lithium batteries will exceed 1,200 GWh.
In summary, a new wave of industrial supply-demand mismatch is approaching.
Furthermore, the deep-seated contradictions in profit distribution remain unresolved. "Anti-involution" can alleviate price wars, but it cannot change the weak position of material factories being "squeezed from both ends" in the industry chain. As long as battery factories maintain an oligopoly pattern while material factories remain fragmented, the trend of profit concentration downstream will not be fundamentally reversed.
The historical story of lithium battery materials is, in essence, a fable about "cycles and human nature."
The frenzy from 2020 to 2022 stemmed from capital's collective belief in and greed for new energy; the collapse from 2023 to 2025 was due to the frantic expansion of capacity and the reversal of the inventory cycle; the rebound from the end of 2025 to the present originates from the rigid contraction on the supply side, the upgrading and replacement of power batteries, and the unexpected explosion of energy storage demand.
In 2022, material factories thought they had grasped the lifeline of "white oil," only to sink in the capacity tsunami. Today, lithium battery material manufacturers have finally waited for the long-overdue "U-shaped reversal," but the lack of pricing power and the fragmented pattern mean that the price for this happiness was already tagged long ago.
Looking globally, Chinese battery materials account for 90% of the market share, but the involution fighting, price melee, greed, and blindness are far from over.
Bidding farewell to the era of massive shocks, mega-cycles, and huge fluctuations over the past decade, the era of making profits solely by studying cycles has completely ended. Moreover, the era of trying to survive the trough with capital advantages and then making a killing in the upward cycle is also completely dying out.