Sharp Rise and Fall! Lithium Battery Sector Experiences Severe Volatility, Bears Still Hold Short-term Advantage

Chinatimes.net.cn Reporter Hu Yawen Beijing Report

On March 20, over 4,700 A-shares declined, with the Shanghai Composite Index falling below 4,000 points to a new low for the year. Meanwhile, the recently deeply adjusted lithium battery sector defied the trend and strengthened, leading the market in gains. Wind data shows that on that day, indices for lithium battery electrolytes, sodium-ion batteries, energy storage, and power batteries all rose by over 2%, with upstream lithium materials and lithium mining sectors also rising in tandem. Several stocks such as Shida Shenghua (603026.SH) and Shangneng Electric (300827.SZ) hit the daily limit up.

However, the new energy sector has experienced intense volatility recently and remains in a downward trend overall. On March 17, the Wind Energy Storage Index dropped 3.43%, marking the largest single-day decline of the week (March 16-20). Yang Delong, Chief Economist and Fund Manager at Qianhai Kaiyuan Fund, told Huaxia Times, “Recently, the A-share market has been affected by the escalation of conflicts in the Middle East, causing significant adjustments in the market, but this is only short-term. The overall market trend of a slow and long bull has not changed. During economic transformation, industry differentiation is quite pronounced, with emerging industries attracting large capital inflows daily. In terms of technological innovation, focus can be placed on robotics, chips, energy storage, as well as power equipment and non-commodity industries like non-ferrous metals that won’t be eliminated by AI.”

Rebound After Decline

This week, the Shanghai Composite Index continued to fall, losing the 4,000-point mark and returning to its position at the start of 2026. Unlike indices such as cloud computing, data security, and fintech, which declined sharply, the new energy sector defied the trend and strengthened. On March 20, during midday trading, several lithium battery-related sectors rose by over 3%, but then sharply pulled back in the late session, with gains reducing to around 2%.

Looking at the performance of lithium-related sectors throughout the day, energy storage stocks showed a clear upward trend, though there was structural differentiation within the sector rather than a broad rally. Of the 57 constituent stocks, 36 rose, 21 fell, and 11 increased by more than 8%. By the close on March 20, the energy storage sector saw Shangneng Electric hit a 20% daily limit up, Yongzhen Co. (603381.SH), Haopeng Technology (001283.SZ), and Chint Power (002150.SZ) each hit a 10% limit up, while Jinneng Technology (300763.SZ), Yunneng Technology (688348.SH), and Penghui Energy (300438.SZ) all rose over 10%. Additionally, Shida Shenghua in the lithium electrolyte sector also hit a 10% limit up.

This week, the energy storage sector experienced high volatility, with sharp declines followed by rebounds and subsequent pullbacks. On March 17, the Wind Energy Storage Index fell 3.43%, the largest single-day drop. On March 18, the index’s trading volume briefly dropped to a low of 70.353 billion yuan. However, on March 20, capital clearly flowed back in, with the sector rising by 2.47%, with a trading volume of 134.066 billion yuan and a turnover of 2.271 billion shares—both the highest of the week—though the late-session decline still reflected significant market divergence.

Similar to the sector’s performance, individual stocks also experienced considerable fluctuations. Shangneng Electric fell to 37.2 yuan per share on March 18 but recovered to 44.93 yuan on March 20. Jinneng Technology dropped to 97.3 yuan on March 17 and closed at 119.5 yuan on March 20. Yunneng Technology fell to 56.26 yuan on March 17 and rose to 65.55 yuan on March 20.

Regarding the recent declines in non-ferrous metals such as copper, aluminum, and lithium, Yang Delong stated, “Non-ferrous metals are typical high-elasticity commodities. They tend to see large gains during bullish phases and are also prone to concentrated sell-offs during downturns. Since prices had already risen significantly earlier, coupled with escalating Middle East conflicts increasing market risk aversion, investors’ risk appetite has decreased. In the short term, the overall non-ferrous metals sector is in a correction phase, with funds shifting toward heavy assets and low-elimination industries such as power, grid equipment, and railways. These traditional blue-chip stocks have lower valuations and higher dividend yields.”

Short-term Trading Still Ongoing

Many brokerages pointed out in March reports that the escalation of Middle East conflicts is a key driver of recent market volatility and capital rotation. CITIC Securities stated, “The US-Israel military strikes on Iran have triggered turbulence in global stock markets, with investors divided on the subsequent impact of the war. The escalation increases uncertainty in global energy supply, rapidly boosting risk aversion, with funds moving from stocks and other risk assets into gold, US dollars, and other safe havens. However, in the past 20 years, among seven major conflicts in the Middle East, the A-share market’s panic sell-off periods have generally been short, and the current market correction is sufficient; the medium- and long-term trend remains unaffected by short-term geopolitical disturbances.”

After a deep correction at the start of the week, why did capital flow back on March 20? From the perspective of some companies, there was no new news. On March 20, a representative from Jinneng Technology told Huaxia Times, “Since the beginning of the year, the company’s demand and production scheduling have been normal and stable. It’s hard to directly assess demand in the European and American markets; we need to keep monitoring.”

From an industry perspective, some positive signals have emerged, with March production resumption news boosting confidence. Several brokerages noted that March’s pre-production plans for the lithium battery industry chain have significantly improved. Dandong Times Think Tank surveyed the top 20 battery manufacturers, showing that in March 2026, China’s lithium battery production is expected to reach about 219 gigawatt-hours, a 16.5% month-on-month increase, with energy storage cell production accounting for 40.6%. Globally, lithium battery output is around 232 gigawatt-hours, up 19% MoM.

Wanlian Securities’ research report pointed out that energy storage is a key driver of lithium battery shipment growth. “By 2026, the energy storage market is expected to show stable growth domestically and multiple points of expansion overseas. Currently, domestic energy storage project returns are improving, with high growth in bidding scale and stable installation demand. Overseas, data center construction in the US is accelerating, creating demand for energy storage; Europe’s large storage needs remain strong with high long-term growth certainty; emerging markets like the Middle East and Australia, supported by policies, are increasing demand for large and household storage.”

Jinlang Technology, the world’s third-largest inverter manufacturer, has historically been less involved in energy storage systems. Since Q4 2025, the company has been selling high-power inverters for commercial storage and has launched commercial and industrial storage systems, beginning mass shipments in January 2026. Currently, it is in the ramp-up phase. In March, during investor visits, Jinlang stated, “Energy storage systems are a core strategic growth area this year, mainly for export. Europe remains our largest overseas market, with Southeast Asia and Africa as emerging markets. The commercial storage market has huge potential, but the base is small now; we expect rapid growth over the next three years.”

It is worth noting that the trend of leading companies strengthening their positions in energy storage is clear. Dandong Times Think Tank pointed out that the supply landscape is characterized by “core production lines at full capacity, while marginal lines remain dormant,” with leading companies’ energy storage cell orders accounting for over 70% of industry growth. “Demand is highly concentrated in large-sized products of 314Ah and above, while the market for small and medium-sized storage cells is being squeezed. Leading companies’ energy storage production lines have never stopped since the start of the year; some factories operate three shifts even during the Spring Festival. In contrast, the restart rate for small capacity consumer and niche power cells is only 50-60%, and many second- and third-tier manufacturers have halted production altogether, exiting the market.”

Editor: Li Weilai Chief Editor: Zhang Yuning