Lithium battery chain sees 32 of 35 firms post H1 profit surge

Thirty-two of 35 Chinese lithium battery supply chain companies swung to profit or narrowed losses in the first half, confirming a sector-wide recovery.

Thirty-two of 35 Chinese lithium battery supply chain companies posted profit growth, turned profitable or narrowed losses in the first half, confirming a cyclical recovery across the full value chain from lithium mining to battery cell production.

"The synchronized recovery across upstream, midstream and downstream segments confirms the industry has entered an upward cycle," said an analyst at a Shanghai-based brokerage, as reported by Shanghai Securities News.

Upstream lithium salt producers led the rebound, benefiting from rising lithium carbonate prices and higher shipment volumes. Midstream manufacturers of separators and electrolytes also reported improved margins, while downstream power battery and energy storage companies saw profitability recover after a prolonged downturn. The data, compiled by Choice, covers 35 listed companies that disclosed H1 2026 earnings forecasts by the July 15 deadline. Only three companies reported year-on-year profit declines.

The broad-based recovery suggests healthy demand transmission from end-markets including electric vehicles and grid-scale energy storage. With lithium carbonate prices stabilizing above 80,000 yuan per tonne after a 2024 trough, and battery cell costs declining to about 70 yuan per watt-hour, the sector may sustain margin expansion through the second half.

The recovery marks a sharp reversal from 2024, when overcapacity and falling lithium prices pushed many producers into losses. Lithium carbonate fell to as low as 70,000 yuan per tonne in early 2024 before recovering to around 85,000 yuan in recent months, according to Shanghai Metals Market data. The price rebound has directly boosted margins at producers including Tianqi Lithium and Ganfeng Lithium, both of which flagged stronger first-half results.

Midstream material makers have also benefited. Separator and electrolyte producers, which faced margin compression during the 2024 downturn, reported sequential improvement as battery makers restocked inventories. The recovery in downstream demand is supported by China's electric vehicle sales, which rose 28% year-on-year in the first half to 4.9 million units, according to the China Passenger Car Association.

The energy storage segment provided an additional demand tailwind. China added 42 gigawatt-hours of new grid-scale battery storage in H1 2026, up 55% from a year earlier, driven by provincial mandates and falling system costs. CATL and BYD, the country's two largest battery producers, both reported higher utilization rates at their storage battery lines.

Technology shifts are also reshaping competition. CATL announced in April it would begin mass-producing sodium-ion batteries before year-end, targeting cost parity with lithium iron phosphate cells by late 2026. Sodium-ion chemistry, which uses cheaper and more abundant raw materials, could further reduce battery costs and expand addressable markets in entry-level EVs and stationary storage, according to BloombergNEF.

For investors, the earnings pre-announcements confirm the sector's recovery thesis and could drive further institutional buying into A-share lithium and battery stocks. The CSI New Energy Vehicles Index has gained 18% year-to-date, outperforming the broader Shanghai Composite Index by 12 percentage points. However, risks remain: lithium prices could face renewed pressure if supply growth outpaces demand, while trade tensions with the European Union and United States continue to cloud export prospects for Chinese battery makers.

This article is for informational purposes only and does not constitute investment advice.