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 year-on-year increase of 33.7%, driving rapid growth in electrolyte demand. Combining 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. At the same time, solvent prices are also expected to return to reasonable levels. The lithium battery new cycle favors the electrolyte industry chain represented by 6F and VC, which are expected to see profit restructuring, with a primary 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 energy storage capacity electricity prices, 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% increase year-on-year, 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 effective capacity will be about 936,000/1,106,000 tons; DMC about 903,000/1,290,000 tons; EMC around 1,085,000/1,135,000 tons; VC about 79,000/114,000 tons; and FEC about 40,000/57,000 tons.

Considering supply and demand, 6F and VC are expected to 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, and VC will remain in tight balance throughout the year, with supply and demand tightening in Q4. Demand in Q1 of 2026 is relatively weak due to the off-season, but as demand picks up in Q2 and Q3, prices for 6F and VC are expected to stay high. The solvent supply-demand relationship is also expected to improve significantly, with solvent prices likely to recover to reasonable profit levels.

The lithium battery new cycle favors the electrolyte industry chain represented by 6F and VC, which are expected to undergo profit restructuring, with a primary emphasis on 6F and VC segments.

(Source: People’s Financial News)