Likes ReceivedPerformance surged by 966%! Ganfeng Lithium, a giant with a market cap of hundreds of billions, the cycle's 'tribulation' has not yet ended.
The trend of performance recovery has not driven a synchronous repair in valuation. The current "Lithium King," Ganfeng Lithium, is experiencing an awkward moment where its fundamentals and market trends are severely disconnected.
On July 15, Ganfeng Lithium disclosed its performance forecast for the first half of 2026. The announcement showed that the company expects to achieve a net profit attributable to shareholders of 3.65 billion to 4.6 billion yuan in the first half, representing a year-on-year increase of 787% to 966%; in contrast, during the same period last year, Ganfeng Lithium reported a net loss attributable to shareholders of 531 million yuan; non-GAAP net profit was estimated at 3 billion to 4.2 billion yuan, up 428.64% to 560.10% year-on-year.
From annual losses and sluggish performance to a significant turnaround into profitability, Ganfeng Lithium's performance reversal intuitively demonstrates the strong cyclical nature of the lithium mining industry and the brutal pace of industry reshuffling.
Benefiting from the substantial improvement in performance expectations, Ganfeng Lithium enjoyed a significant rally in 2025. However, entering 2026, under the expectation of weakening lithium carbonate prices, Ganfeng Lithium's stock price has continued to face pressure and adjust.
Data statistics show that since the beginning of this year, Ganfeng Lithium's A-shares have accumulated a decline of 24%; if calculated from the local high on May 6, the maximum drawdown of the stock price exceeded 48%, with market capitalization evaporating by over 92 billion yuan. As of the latest close, Ganfeng Lithium's total market value had broken below the 100 billion yuan mark, reporting 99.4 billion yuan.
The "Cyclical Dilemma" Behind the Plunge
The core reason why the capital market did not buy into this bright performance report is that the cyclical dilemma of the lithium carbonate industry has not truly been resolved.
From the perspective of industry supply and demand structure, the cycle from upstream lithium mine exploration and approval to production takes two to three years, belonging to a typical slow variable in supply; whereas the demand explosion in downstream new energy and energy storage often concentrates within just a few quarters. The rapid rise in EV penetration in 2022 and the concentrated release of AI energy storage demand in 2025 are both examples of this.
The natural mismatch between lagging supply release and rapid demand explosion keeps lithium prices cycling repeatedly, trapped in the loop of "shortage leads to price hikes - expansion leads to oversupply - crash clears out capacity - shortage returns." As the industry leader holding massive lithium mine resources, Ganfeng Lithium naturally cannot escape this cyclical law.
Looking back at 2022, lithium carbonate prices surged to a historical high of 600,000 yuan/ton. Ganfeng Lithium raked in 20.5 billion yuan in net profit that year, nearly four times the scale of the previous year. Although lithium prices fell somewhat in 2023, overall price levels remained high, and the company's full-year net profit still reached 4.947 billion yuan.
The true turning point and winter for the industry appeared in 2024. This year, lithium carbonate prices plummeted from over 100,000 yuan/ton at the beginning of the year to 60,000 yuan/ton. Dragged down by the deep collapse in lithium prices, Ganfeng Lithium suffered a huge full-year loss of 2.074 billion yuan. In the first half of 2025, the company still lost 531 million yuan; it was not until the second half of the year, when lithium prices hit bottom and rebounded, that the company's full-year net profit attributable to shareholders barely turned positive. However, excluding the fair value change gains brought by the rise in Pilbara stock prices, the company's main business remained in a loss-making state.
In just three years, net profit dropped from a peak of 20.5 billion yuan to a loss of 2.074 billion yuan. Such volatility in performance is rare among A-share cyclical stocks.
In fact, the severe fluctuations in lithium carbonate prices have brought impacts far beyond the number changes on the income statement.
The most immediate impact is large-scale asset impairment. When lithium carbonate prices plummeted from 600,000 yuan/ton to 60,000 yuan/ton, what Ganfeng Lithium lost was not just book profits, but also the asset value of its existing lithium mines and inventory.
In 2024, affected by the deep downturn in lithium prices, Ganfeng Lithium made large provisions for asset impairment. Previously locked-in mineral resources and raw material inventories at high prices directly transformed from quality assets into operational burdens. For many years, the cycle of "reversing impairments when prices rise and making provisions when prices fall" has repeated itself, becoming a core factor continuously suppressing the company's valuation.
In addition, the significant fluctuation in lithium prices profoundly affects the rhythm of corporate capital expenditure. When the industry is in an upturn and lithium prices are high, upstream enterprises expanding production has almost become industry norm; but large-scale capacity expansion will continue to overdraft future supply and demand patterns, spawning a new round of capacity oversupply. When the industry enters a downturn cycle, all links in the industrial chain will bear the backlash of declining performance and shrinking profits.
Breaking free from the shackles of cyclical fluctuations is the long-term necessary path for Ganfeng Lithium and even all cyclical industry enterprises. In recent years, Ganfeng Lithium has continued to layout downstream battery businesses to improve its integrated industrial chain layout, aiming to smooth out cyclical fluctuations and stabilize overall performance.
A New Cycle Has Begun
For the current Ganfeng Lithium, cyclical fluctuations are merely routine challenges; the greater concern lies in the fact that a new downward cycle for lithium carbonate has quietly begun.
On July 20, the spot average price of battery-grade lithium carbonate was quoted at 152,200 yuan/ton, a cumulative drop of 25,000 yuan from early June.
Compared to the spot market, the decline in the futures sector was more severe: the LC2609 main contract accumulated a drop of about 15% since June. On July 21, it plunged another 6.87% in a single day, with prices directly breaking below the 140,000 yuan/ton mark. Compared to the average high of 160,000 to 170,000 yuan/ton in the first half of the year, current prices have fallen by nearly 20%.
The core 诱因 (inducement) for this turn in lithium prices downward is concentrated in the supply side.
Over the past few months, the release of new global lithium mine capacity has been concentrated, with the landing pace far exceeding market expectations. CATL's Jianxiawo lithium mine officially resumed production at the end of June; the Dazhong Mining Hunan Linwu Jiaojiao Mountain project ignited and started production in June; the Chinese-owned Diamond Energy West Africa 3 million tons/year lithium mine project successfully started production in July; and Guocheng Lithium Industry's Sichuan Mianzhu Phase I 60,000-ton capacity also officially landed in mid-July.
At the same time, mines previously shut down in Australia plan to resume production successively in the third quarter, while South American salt lakes and African overseas capacities are also in a steady ramp-up phase.
Rough calculations show that after all the above new capacities reach full production, the new supply volume of global lithium resources in the second half of 2026 will be at least equivalent to 100,000 tons of lithium carbonate. Compared to the global total demand scale of 1.5 million tons of lithium carbonate in 2025, the magnitude of this new supply is sufficient to completely change the industry's supply and demand balance pattern.
In addition, policy changes have further exacerbated market concerns. On July 17, the Ministry of Finance and other departments jointly issued an announcement that starting from September 1, 2026, a 2% consumption tax will be levied on lithium batteries, and the tax rate will be raised to 4% starting from September 2027.
Although the consumption tax is directly levied on battery manufacturing enterprises, the cost pressure will transmit upstream along the industrial chain. If terminal new energy vehicles and energy storage products experience slowed demand due to increased costs, the central tendency of lithium carbonate prices will likely move further down.
The new downward cycle will impact Ganfeng Lithium from multiple dimensions.
First, the profitability of the lithium salt main business will be continuously compressed. In the first half of 2026, under the condition that the average lithium carbonate price remained in the range of 160,000 to 170,000 yuan/ton, the company achieved high profits. But currently, lithium prices have broken below 140,000 yuan/ton. According to industry cost curve calculations, if lithium prices further probe down to around 120,000 yuan/ton, the profit margin of the lithium salt business will shrink rapidly. During the previous process where lithium prices fell from 170,000 yuan/ton to 60,000 yuan/ton, Ganfeng Lithium went from significant profitability to huge losses; history may repeat itself.
Secondly, the risk of inventory impairment is rising again. The large impairment provisions triggered by the lithium price plunge in 2024 still exert a continuous impact on the company's fundamentals. Although current lithium prices have not touched historical extremes, under the dual pressure of concentrated release of new capacity and slowing terminal demand growth, it is not impossible for lithium carbonate prices to break below 100,000 yuan/ton again. At that time, the old impairment pressure will not have been fully digested, and a new round of inventory impairment risks will follow closely.
More fatally, the node at which this downward cycle begins coincides with the company's peak period of capital expenditure.
Even though Ganfeng Lithium secured high profits in the first half of 2026, it still faces funding pressures brought by multi-line expansion: continuous investment in overseas lithium mine projects, continuous expansion of domestic lithium salt production lines, and the downstream battery business is still in the incubation period, having not yet formed self-blood-making capabilities.
Financial report data shows that as of the end of the first quarter this year, Ganfeng Lithium's total liabilities were as high as 65.69 billion yuan. Among them, short-term borrowings were 9.892 billion yuan, and non-current liabilities due within one year were 6.282 billion yuan, with the two items of short-term rigid debt totaling over 16 billion yuan. Meanwhile, the company's book monetary funds were only 10.55 billion yuan, highlighting prominent short-term debt repayment pressure.
In summary, the new cycle switch in the lithium mining industry has landed. In the short term, Ganfeng Lithium's performance will continue to be realized, but medium-to-long-term risks cannot be ignored. Subsequent focus should be placed on tracking demand changes in the two core downstream sectors of power batteries and energy storage. If demand in these two tracks continues to weaken, the company's performance will likely come under pressure again.
The copyright of this article belongs to the original author/organization.
The views expressed herein are solely those of the author and do not reflect the stance of the platform. The content is intended for investment reference purposes only and shall not be considered as investment advice. Please contact us if you have any questions or suggestions regarding the content services provided by the platform.
