[China Merchants Electric New Energy] VC industry update - 20260728

English summary

Supply and demand are tighter. August battery production schedules are +9% MoM, with demand continuing to rise. Industry feedback indicates that VC supply and demand are currently in a gap, with downstream relying mainly on inventory and reduced volumes. VC prices continue to rise. Recently, Xinlu Lithium Battery shows VC third-party prices jumped from RMB 170,000–200,000/ton to RMB 200,000–250,000/ton. Since May, VC prices have continued to climb from RMB 125,000–135,000/ton, accelerating after late June. Industry feedback indicates that VC capacity is currently fully utilized. Supply release is relatively restrained. Previously, the market expected that the quick release of 30,000 tons of capacity by leading companies in Q4 would affect prices. In reality, the release progress may be relatively restrained. Combined with recent environmental inspections of some industry companies, we believe VC prices are entering a main upward wave. Looking to next year, VC will see a wave of capacity expansion, but the actual release pace by leaders is expected to be cautious, and other companies' wait-and-see stance is unlikely to change significantly. Industry prices are expected to remain high.…