A cylindrical cell sorting device is in operation at InterBattery 2025, held on March 5 this year at COEX in Gangnam-gu, Seoul. (Yonhap)
SEOUL, July 28 (Korea Bizwire) — South Korea’s battery sector surged to the top of domestic stock performance rankings in July, buoyed by rising lithium prices and new U.S. trade actions against China. Yet individual investors are increasingly betting on a market correction, diverging sharply from the bullish stance of foreign institutions.
According to data from the Korea Exchange released Sunday, the KRX Secondary Battery Top 10 Index—comprising major battery-related firms such as LG Energy Solution, POSCO Holdings, and Samsung SDI—jumped 15.8% so far this month, outperforming the broader KOSPI’s 4.0% gain by nearly fourfold.
The collective market capitalization of the index’s ten constituent firms grew by over 32 trillion won ($23 billion), reaching 203.5 trillion won by July 26. The rally follows a prolonged slump stemming from concerns over weakening electric vehicle (EV) demand and fears that former U.S. President Donald Trump might reimpose steep tariffs on imported cars and dismantle current EV tax incentives if reelected.
Momentum began shifting this month after a major Chinese lithium producer suspended production, prompting a rebound in lithium prices. Further fueling investor optimism, the U.S. Commerce Department announced an anti-dumping tariff of 93.5% on Chinese graphite—a key battery material—raising hopes that Korean battery firms will benefit from reduced Chinese competition.
This photo taken on March 3, 2025, and provided by Samsung SDI Co. shows DAL-e and MobED, robots developed by Hyundai Motor Group Robotics LAB and equipped with its cylindrical batteries, displayed at its booth during the InterBattery 2025 trade show taking place in southern Seoul. (Image courtesy of Yonhap)
Foreign investors responded swiftly. This month alone, they purchased 64 billion won in LG Energy Solution shares and over 130 billion won in POSCO Holdings. However, retail investors are not following suit. Instead, they poured 21.5 billion won into inverse ETFs betting on a decline in the battery sector, compared to just 430 million won into long-positioned ETFs—a staggering 54-to-1 imbalance.
Analysts caution that the rally may be overextended. With U.S. EV subsidies expected to end in September and lithium prices unlikely to sustain upward momentum, concerns about a pullback are growing. Tesla CEO Elon Musk acknowledged in a recent earnings call that subsidy cuts could challenge the EV market in the near term.
“Without major structural shifts in lithium supply or EV pricing, it’s too early to talk about a long-term lithium price recovery,” said Kim Ye-rim, an analyst at Korea Investment & Securities.
Still, some see upside potential in the energy storage systems (ESS) market. As demand for grid stability and renewable energy storage grows, analysts say battery makers may find more stable and profitable opportunities beyond EVs.
A showcase of next-generation battery technologies draws attention at the 2025 InterBattery exhibition.
“ESS batteries sell at nearly double the price of EV cells and are less affected by short-term policy changes,” said Jeong Won-seok, an analyst at iM Securities. “If Korean firms expand their share in the U.S. ESS market, the battery sector could deliver stronger-than-expected earnings and trigger a renewed stock rally—despite EV headwinds.”
Kevin Lee (kevinlee@koreabizwire.com)
