Hello, this is Daily Stock.
Recently, the volatility of global lithium prices has emerged as a key variable determining the earnings and stock price direction of KOSDAQ-listed secondary battery material companies.
Key Takeaways
- **Dramatic Rebound in Lithium Prices**: In 2026, the price of lithium carbonate broke back above $20 per kg, signaling a recovery in the selling price of cathode materials.
- **Write-back of Inventory Valuation Losses and Margin Improvement**: Major cathode companies such as L&F and EcoPro BM demonstrated earnings surprises or solid profitability in Q1, indicating they have entered the early stages of a long-term turnaround.
- **Diversification Focused on ESS and High-Value High-Nickel Products**: Beyond simple electric vehicle (EV) demand, the Energy Storage System (ESS) market, coupled with the expansion of AI data centers, is emerging as a new cash cow.
Market Overview
As of the market close on June 3, 2026, the domestic stock market showed a mixed trend, with the KOSPI closing at 8,801.49 and the KOSDAQ at 1,026.03.
The USD/KRW exchange rate closed at 1,526.00 KRW, a high-rate regime that brings benefits to exporting companies while simultaneously placing a burden on raw material procurement costs.
According to Daily Stock's proprietary Fear & Greed Index, which represents sentiment in global financial markets, the KOSPI Fear & Greed Index currently points to Neutral (58.3).
This is slightly up from Neutral (57.1) a week ago, but has cooled down compared to Greed (65.7) a month ago, and is a clear improvement from the Fear (37.4) phase three months ago.
The Nasdaq Fear & Greed Index is also currently calculated as Neutral (57.1).
It has stepped down from Greed (60.6) a week ago and Greed (71.2) a month ago, showing an increase in wait-and-see sentiment.
Under these macroeconomic conditions, the bottoming out of lithium prices over the past few months is blowing a strong tailwind across the secondary battery material sector.
According to the Korea Mine Rehabilitation and Mineral Resources Corporation, lithium prices, which were around $18.88 per kg in early April, surged by about 24.5% to around $23.51 in mid-May.
In addition, the spot price of lithium carbonate on the Shanghai Futures Exchange is trading at around 175,750 yuan (CNY) per ton as of June 2, 2026, continuing to build a solid bottom.
[Image: /stdaily/uploads/202606/gen_6a1fdf8f80f322.87744741.png]
Financial Analysis
The "negative lagging effect" caused by the decline in raw material prices, which had been eating into the profits of battery material companies, is dissipating.
Conversely, the "positive lagging effect" from rising selling prices and the "write-back of inventory valuation allowances" have begun to act as key drivers of performance improvement.
A prime example is L&F.
L&F's Q1 2026 revenue reached 739.6 billion KRW, and its operating profit reached 117.3 billion KRW, successfully turning a profit compared to the same period last year.
This is a surprising "earnings surprise" that exceeded the market consensus by approximately 93%.
Thanks to the rebound in metal prices, a massive write-back of inventory valuation allowances worth 92.6 billion KRW occurred. Furthermore, the share of Ultra High-Nickel NCMA 95% products bound for Tesla surged to 88% of the total, proving qualitative improvements in its fundamental strength.
EcoPro BM also recorded its fifth consecutive quarter of operating profit.
It announced Q1 revenue of 605.4 billion KRW and operating profit of 20.9 billion KRW, showing profitability more than double the market consensus of 9.8 billion KRW.
In particular, revenue from cathode materials for Energy Storage Systems (ESS), driven by renewable energy infrastructure and AI data center expansion, surged 140% year-on-year, completely offsetting the sluggishness in EVs.
POSCO Future M also secured profitability in Q1, recording revenue of 757.5 billion KRW and operating profit of 17.7 billion KRW.
It is encouraging that it achieved a major turnaround from an operating loss of 51.8 billion KRW in the previous quarter.
| Company | Q1 2026 Revenue (Consolidated) | Q1 2026 Operating Profit (Consolidated) | YoY Operating Profit Change (%) | Key Features |
|---|---|---|---|---|
| **L&F** | 739.6B KRW | 117.3B KRW | Turnaround | 92.6B KRW inventory write-back & full operation of high-nickel for Tesla |
| **EcoPro BM** | 605.4B KRW | 20.9B KRW | +822.6% | 5th consecutive profitable quarter, ESS revenue grew 140% YoY |
| **POSCO Future M** | 757.5B KRW | 17.7B KRW | +3.2% | Escaped loss from previous quarter & sharply narrowed energy materials deficit |
[Image: /stdaily/uploads/202606/gen_6a1fdf9ce25be5.17296319.png]
Valuation
Some point out that the valuation of the secondary battery materials sector currently reflects some of the stock price rebound driven by short-term supply and demand improvements, meaning it still maintains high multiples.
In the case of L&F, when applying the 2028 estimated earnings and the global peer average EV/EBITDA multiple of 21.2x, the target price is being raised to around 240,000 to 250,000 KRW.
However, because the current stock price priced in much of the future performance recovery, a strategy of entering during corrections rather than chasing short-term rallies is more effective.
For EcoPro BM, a mid-to-long-term valuation re-rating is expected considering the visibility of its Debrecen plant in Hungary starting operation in Q2 and the momentum of supply diversification to European OEMs. Yet, its short-term P/E remains highly valued.
POSCO Future M's unique raw material vertical integration within its group, such as the salt lake in Argentina and mines in Australia, will also lead to the resolution of long-term discount factors.
However, because the valuation burden based on short-term earnings per share (EPS) is not low, an approach from a trading perspective is necessary at this time.
Analyst & Institutional View
Securities market experts evaluate that the rise in lithium prices is serving as a "shield" that completely removes the risk of falling selling prices for cathode companies.
According to Hanwha Investment & Securities, Korea's cathode export price in April was $25 per kg, up 4% from the previous month, finally beginning to officially reflect the rise in lithium prices in its selling prices.
This suggests that the long-standing downward trend in cathode export prices has finally entered a stabilization phase.
Experts in the financial investment industry, such as iM Securities, emphasize that attention should be paid not only to simple high-nickel volumes for premium EVs, but also to portfolios diversifying into LFP product lines with excellent price competitiveness in the mid-to-long term, and solid electrolytes for next-generation solid-state batteries.
In particular, companies that quickly preempt the non-Chinese LFP supply chain are highly likely to benefit in the long term.
Swiss investment bank UBS raised its 2026 lithium demand forecast by 14% compared to the previous estimate, hinting at the potential arrival of a "third lithium supercycle."
Morgan Stanley also predicted that global lithium supply and demand this year will face a structural shortage of about 80,000 tons based on lithium carbonate equivalent (LCE).
Risk Factors
The first factor to watch out for is the potential delay in the normalization of global electric vehicle (EV) adoption.
If subsidy policies in Europe or North America shake up again, or if EV demand falls short of expectations, the rebound in lithium prices could end up as a temporary technical bounce.
Secondly, there is the acceleration of alternative battery technologies.
If the development of next-generation batteries with significantly lower costs, such as sodium-ion batteries (SIB), accelerates, lithium demand in the low-to-medium-priced energy storage system (ESS) market could be quickly eroded.
Lastly, geopolitical regulatory uncertainty persists.
Policies in the US and Europe to exclude the Chinese battery supply chain continue to cause volatility, and Korean material companies' joint ventures with Chinese capital must remain open to potential friction in terms of financing or regulatory compliance.
Investment Outlook
Secondary battery material stocks behave like cyclical growth stocks that cannot escape the "synchronization effect" with mineral prices, including lithium.
Therefore, the point when raw material prices pass their historical lows can be the safest entry scenario.
However, rather than relying solely on raw material prices, it is time to compress portfolios around market leaders that have built supply chain internalization and raw material vertical integration, and secured direct delivery channels to global OEMs like Tesla.
Maintaining a mid-to-long-term perspective on the top three large cathode makers, where growth potential and profit visibility coexist, and using volatility for an accumulation-type installment approach remains a reasonable alternative.
Investor Checklist Q&A
Q1. What is the approximate time lag for lithium prices to be reflected in cathode selling prices?
Normally, it takes about one to three months for lithium prices procured from mines to go through the cathode processing phase and be reflected in the final Average Selling Price (ASP). This is called the lagging effect.
Q2. How specifically did the recent rebound in lithium prices affect the financial statements of the top three cathode companies?
The rise in metal prices not only recovered product selling prices, but also served as a catalyst to write back "inventory valuation loss allowances" on high-priced raw materials that had been preemptively set aside.
Q3. Why are cathode companies focusing on developing LFP product lines?
As the adoption rate of cost-competitive LFP batteries in the global EV and large-scale ESS markets is growing explosively, Korean companies are expanding their portfolios, which previously centered on ternary (NCM) batteries, to high-density LFP and other types to offset the risk of slowing growth.
Q4. Could changes in US tariff relief on China or supply chain regulations work against domestic companies?
If regulatory barriers are temporarily eased, the entry of low-cost Chinese precursors or cathodes into the market may become easier, creating short-term price pressure for Korean supply chain companies. However, the mid-to-long-term trend of shifting supply chains away from China is expected to remain solid.
Q5. What is the most important trading strategy for investing in secondary battery material stocks?
Because macro variables (interest rates, lithium prices) and sentimental volatility due to US-China conflicts are high, patience is required to buy in installments at the lower end of valuations and wait for a long-term earnings turnaround rather than chasing price peaks.