Today, the stock markets witnessed an intriguing scenario: a remarkable 3,022 stocks experienced an upswing, while 1,399 stocks faced a decline. This reflects a general trend of positive growth, indicating a broad-based rally. However, the indices saw a corrective adjustment, particularly notable in the lithium battery sector, which faced significant downward pressure. Stocks associated with Contemporary Amperex Technology Co., Ltd., known as CATL, including Yongtai Technology and Hubei Yihua, plummeted drastically, causing widespread panic across the entire new energy sector. Nonetheless, it is essential to remember that sectors showing strength typically experience only temporary downturns.

Upon reviewing the post-trading landscape, the unfavorable news was minimal, and limited to two primary developments. One report suggested that expectations for the growth of new energy in the upcoming year should be tempered. The second significant update involved a shift in the technology surrounding the much-discussed 4680 battery, specifically regarding changes in material requirements, which may indicate a substantial decrease.

Further details reveal forecasts from brokerage research institutes predicting that CATL's installed capacity will reach 350 GWh next year, but seasoned industry analysts believe that it will peak at 270 GWh.

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Additionally, market rumors suggest changes in the prevalent 4680 battery technology, notably omitting the liquid phase in the dry electrode process, skipping direct coating and drying steps, and instead incorporating the active anode and cathode materials directly onto copper or aluminum foils.

It's crucial to note that these capacity forecasts are merely estimates. The current trajectory of the electric vehicle (EV) sector is experiencing explosive growth, a trend I previously pointed out, where before 2018, only a few automakers like Tesla dominated the market, and it wasn't until the emergence of new players post-2018 that we began to witness a drastic increase in demand. With ongoing policy support and the integration of energy storage systems into this growth framework, expectations regarding CATL's capacity were calculating only current demands without factoring in the evolving needs of the energy storage realm.

In addition to these factors, concerns of potential corrections due to excessive gains lead to a forecast for price adjustments. For instance, Hubei Yihua's announcement of not having immediate supply capabilities triggered a rapid decline in stock prices. However, this was a standard announcement; one cannot expect immediate supply upon the initiation of a partnership. Therefore, this fluctuation appears tied to specific event-driven reactions. Regarding Yongtai Technology, the stock saw a sharp drop after opening strong, leaving investors fearing that positive news had been exhausted. Yet, with CATL's investment, expectations should prevent deeper losses. Market trends indicate that in sectors with high technological concentration, value investment gravitating towards industry leaders is really a representation of natural market laws.

Summarizing today’s events, the significant decline in lithium battery stocks may be regarded as an overreaction. Post-market updates from Multi-Forever indicated that BYD aims to procure no less than 56,050 tons of lithium hexafluorophosphate from them, effective from January 2022 to December 2025. This reflects an ongoing boom in demand, contrary to previous market forecasts estimating overall demand reaching 165,000 tons per year by 2025. Reports suggest that the global demand for lithium hexafluorophosphate in 2021 was around 65,000 tons, with projections indicating a rise to 203,000 tons by 2025.

Thus, the market still holds speculative opportunities due to discrepancies in demand projections. However, prominently high-flying stocks might be in for a consolidation phase since profit-taking strategies could hinder rapid recoveries. Waiting for performance confirmations seems wise, considering ongoing price fluctuations pose various uncertainties, including fears of price reductions. Despite these concerns, current demand consistently outstrips supply, making price declines challenging. Of course, concurrently managing associated risks remains paramount, especially with stocks that have surged significantly. A decent strategy would be to remain calm while observing the market from late October to the spring festival period. Notably, sectors with robust performance forecasts will soon kickstart discussions surrounding annual reports, a trend investors should watch closely.

Regarding the recent decline in yellow phosphorus prices, there has been a slight rebound since last week. Overall, phosphorous demand continues to rise, against an expanding production rate—especially as new seasonal needs emerge. Thus, price predictions appear favorable toward stabilization. If prices can rebound above 40,000, this sector could regain momentum. Conversely, failing to maintain higher levels might result in lingering stagnation as the year-end reporting season stimulates activity. Regardless of the circumstances, phosphorus has emerged as a relatively resilient segment within the renewable energy sector, experiencing lesser declines, accompanied by immense potential in demand. Both automotive and energy storage sectors heavily rely on lithium iron phosphate, and even with the emergence of sodium-ion battery technology, a hybrid approach remains necessary due to the complexity involving such alternatives.