Orient Securities released a research report stating that lithium supply is constrained by short-term disruptions and limited long-term growth rates, while rising demand from energy storage and solid-state batteries has lifted medium-term expectations, with a supply deficit projected to persist from 2026 to 2027. Cobalt supply faces clear constraints due to export quotas from the Democratic Republic of Congo, creating a definite supply gap and providing strong price support. During an upward cycle, attention should be paid to the positive feedback loop of "stocks → futures → spot prices," where stock prices and commodity prices mutually reinforce each other. The report recommends focusing on targets within the lithium and cobalt industry chains. The main views of Orient Securities are as follows: Lithium: Restored demand expectations reignite the inventory replenishment cycle, while ongoing supply disruptions create a medium-term gap. On the supply side, accelerated development of spodumene projects in Africa and stable capacity release from South American salt lakes, combined with compliance-driven management of Chinese lithium resources leading to phased supply contraction of lepidolite, result in a structural characteristic for global supply increments: "frequent short-term disruptions and limited long-term growth." On the demand side, energy storage has emerged as the second major growth driver in the medium term, following the rapid expansion of new energy vehicles, while the commercial potential of solid-state batteries also opens up room for increased lithium consumption intensity per unit. Starting from the second half of 2025, supply disruptions in Jiangxi, China, coupled with robust downstream demand and synchronized inventory replenishment, are expected to push lithium prices into an upward phase after reaching a bottom equilibrium, with a tight supply-demand balance likely to continue through 2026-2027. Stock prices of lithium-related companies tend to lead this movement. Cobalt: Supply is dominated by export quotas from sovereign nations, with a raw material gap providing strong price support. On the supply side, influenced by the export quota system in the Democratic Republic of Congo, a raw material shortfall is virtually certain, leading to a significant contraction in global supply. On the demand side, most cobalt product demand remains weak amid high prices; whether ternary battery cells can rebound with the adoption of solid-state batteries may be the key to a demand inflection point. The Congolese government possesses strong price control capabilities and a firm intention to support prices, and the pace of raw material shipments and exports is slower than expected, suggesting cobalt prices are likely to remain strong in the medium term, offering substantial marginal improvement potential for the profitability of related companies. During an upward cycle, besides fundamentals, it is crucial to recognize the "self-reinforcing" or "cross-reinforcing" attributes between stock prices and commodity prices. Price influencers are multi-faceted: fundamentals (supply, demand, inventory), policy factors (government/geopolitical interventions or guidance), and liquidity (which can cause溢价 or discounts leading to overbought or oversold conditions). In a rising cycle, beyond supply-demand fundamentals, the "self-reinforcing/cross-reinforcing" mechanism between stock prices and commodity prices deserves attention. Stocks, being the most forward-looking due to discounting future earnings, typically react first at expectation inflection points; futures, with their ability to price expectations and transmit signals to spot markets, allow capital to position early and drive basis convergence; spot markets then reach an actual inflection point following inventory replenishment, destocking, and order fulfillment. Consequently, cycles often unfold in the sequence of "stocks → futures → spot," forming a positive feedback loop within this self-reinforcing chain where stock and commodity prices can mutually amplify each other. Relying solely on supply-demand balance sheets may lead to missing market trends. Investment recommendations: Lithium-related targets include Yongxing Materials, Ganfeng Lithium, Shenghua New Energy, Tianqi Lithium, Zangge Mining, Sinomine Resource Group, and Yahua Group; Cobalt-related targets include Huayou Cobalt, Hanrui Cobalt, and China Molybdenum. Risk warnings: New energy vehicle sales growth may fall short of expectations; risks associated with battery technology iteration; changes in assumptions could affect calculation results.