Citigroup expects the battery price increase cycle to continue this year, maintaining a positive outlook on CATL

Citi published a research report stating that the metal and battery industry chain stocks performed strongly last year. Based on current assessments, it believes that the battery price increase cycle will continue this year. Although demand in China's electric vehicle industry is weak, market expectations for energy storage system demand have been significantly upgraded, and some potential positive factors have at least been partially reflected in the stock price performance of related shares.

Citi indicated that with supply constraints and long-term demand prospects, it remains bullish on aluminum and copper prices. It also noted that the implementation progress of the "anti-involution" policy across various industries in China is inconsistent, leading to steel and cement prices and profit margins being lower than expected. The preferred order for the materials sector is aluminum, copper, batteries, gold, battery materials, coal, cement, and steel.

The bank believes that after the price increases in various links of the industry chain and the lithium sector, CATL (03750.HK) still offers the best risk-return profile. It expects a more positive outlook when industry demand resumes after the Lunar New Year, but currently holds a cautious view on the short-term upward trend of lithium prices