Secondary battery stocks, which underperformed the broader market throughout the year, are seeing renewed investor interest. Expectations of an industry recovery, major supply contracts, and Korea's push for its own version of the U.S. Inflation Reduction Act are combining to rapidly improve market sentiment.
According to Koscom ETF Check data on January 12, secondary battery-related exchange-traded funds dominated the top performers over the past week. TIGER Secondary Battery Materials Fn rose 7.3%, while KODEX Secondary Battery Industry Leverage and KODEX Secondary Battery Core Materials 10 each gained 6.0%. SOL Secondary Battery Parts Fn followed with a 5.1% increase.
Secondary battery stocks had struggled amid weak industry conditions, lagging behind market leaders in semiconductors and shipbuilding. Over the past year, while KOSPI rose 67.9% and KOSDAQ gained 37.2%, LG Energy Solution (373220.KS) advanced only 17.9% and Samsung SDI (006400.KS) rose just 26.6%. SK Innovation (096770.KS) actually declined 4%. Industry slowdown concerns and raw material price volatility weighed on investor sentiment.
However, the mood has shifted recently. Lithium carbonate prices hit a yearly high at the end of last month, raising expectations that the industry has bottomed out. Government discussions on a Korean version of the IRA have also resurfaced. The government is pursuing a new "production promotion tax system" to strengthen domestic manufacturing capabilities in response to global supply chain restructuring and competition for advanced technology leadership. The plan centers on expanding tax incentives for strategic industries including secondary batteries, not just semiconductors.
Large supply contract announcements have further ignited investor sentiment. Over the past week, while KOSPI rose just 1.6% and KOSDAQ gained only 1.2%, LG Energy Solution surged 8.7% and Samsung SDI climbed 4.1%. LG Energy Solution disclosed on January 8 that it signed a 2 trillion won ($1.5 billion) electric vehicle battery supply contract with Mercedes-Benz. The amount represents approximately 8% of the company's consolidated revenue last year. Samsung SDI also signed a 2 trillion won-level contract to supply lithium iron phosphate (LFP) batteries for energy storage systems with a U.S. energy infrastructure development and operation company. As positive contract news from leading battery makers continued, the rally spread to materials stocks broadly. POSCO Future M (003670.KS) rose 8.31%, Chunbo (278280.KQ) gained 13.6%, and Ecopro surged 21.8% over the past week, boosted by additional expectations surrounding Alteogen's transfer listing to KOSPI.
Still, some caution that it is premature to conclude the entire industry is recovering. During the same period, SK Innovation rose just 1.15% and Daejoo Electronic Materials (078600.KQ) gained only 1.2%, showing clear divergence among stocks. Industry analysts say more time is needed before earnings improvement materializes in earnest, requiring a selective approach. October global EV sales data shows strong growth continuing in Europe (380,000 units) and China (1.54 million units), while the U.S. recorded only 80,000 units, plunging 38% year-on-year.
"Korea's secondary battery industry is not free from risks associated with weak U.S. EV sales, but it is advisable to focus on stocks with relevant themes while monitoring events such as North American customer acquisition driven by U.S. de-China supply chain issues, the lithium carbonate price rally, and potential changes in recycling companies linked to European battery regulations," said Jang Jung-hoon, a researcher at Samsung Securities.
