CITIC Construction Investment: Optimistic about the Electrolyte Industry Chain Represented by 6F and VC Welcoming Profit Restructuring under the New Lithium Battery Cycle

CITIC Construction Investment points out that under the nonlinear growth of energy storage demand, a new cycle for lithium batteries is becoming increasingly clear. On the demand side, global lithium battery demand is expected to reach 3,065 GWh by 2026, a 33.7% increase year-over-year, driving rapid growth in electrolyte demand. Considering supply and demand, it is expected that 6F and VC will be in tight balance in 2026, while supply conditions for other electrolyte segments are likely to improve. Meanwhile, solvent prices are also expected to return to reasonable levels. We are optimistic about the new lithium battery cycle, with the electrolyte supply chain represented by 6F and VC set to undergo profit restructuring, with a particular focus on 6F and VC segments.

Under the nonlinear growth of energy storage demand, the new lithium battery cycle is becoming clearer. The fundamental logic of this cycle lies in the resonance between increased penetration of new energy generation and decreasing costs of energy storage systems. The core drivers include the promotion of new energy entry into the market by Document No. 136, the widening peak-valley price gap, and the issuance of Document No. 114, which clarifies capacity electricity prices for energy storage, providing stable revenue expectations for energy storage.

On the demand side, we expect global lithium battery demand to reach 3,065 GWh by 2026, a 33.7% YoY increase, corresponding to electrolyte demand of 3.67 million tons, with 6F at 404,000 tons, EC at 917,000 tons, EMC at 822,000 tons, DMC at 1.013 million tons, VC at 110,000 tons, and FEC at 44,000 tons.

On the supply side, our estimates indicate that effective capacity for 6F will be approximately 345,000/414,000 tons in 2025-2026; EC at about 936,000/1,106,000 tons; DMC at around 903,000/1,290,000 tons; EMC at approximately 1,085,000/1,135,000 tons; VC at 79,000/114,000 tons; and FEC at about 40,000/57,000 tons.

Considering supply and demand, it is expected that 6F and VC will be in tight balance in 2026, while supply conditions for other segments are likely to improve. Quarterly, shortages for 6F are expected in the second half of 2026, with VC maintaining tight balance throughout the year. Other segments may see supply and demand tighten in Q4 2026. Demand in Q1 2026 is relatively weak due to seasonal factors, but as demand picks up in Q2 and Q3, prices for 6F and VC are expected to remain high. The solvent supply-demand relationship is also expected to improve significantly, with solvent prices likely to recover to reasonable profit levels.

We are optimistic about the new lithium battery cycle, with the electrolyte industry chain represented by 6F and VC poised for profit restructuring, with a particular emphasis on 6F and VC segments.

(Source: People’s Financial News)