In January, the electrolyte market exhibited a pattern of simultaneous contraction on both the supply and demand sides, with prices rising slightly against the trend. This was primarily influenced by factors such as structural differentiation in end-use demand, lagged transmission of raw material costs, and enterprises' need for profit recovery. The industry is currently in a phase of phased gaming adjustments.
On the production front, both supply and demand in the electrolyte market showed a contraction trend in January. Demand side, market demand displayed significant differentiation: the energy storage system (ESS) sector demonstrated notable resilience, with orders remaining robust, and some newly commissioned capacities gradually entering the ramp-up phase, leading to a slight increase in energy storage battery cell production, which provided some support for electrolyte demand. However, the power battery sector, as the core demand scenario for electrolytes, saw its market demand overdrawn in advance due to the previous halving of the purchase tax for new energy vehicles (NEVs), resulting in a significant weakening of overall NEV sales in January. Consequently, power battery demand was suppressed, and production experienced a certain degree of decline. Given the high proportion of power battery demand, its decline had a greater drag effect than the incremental contribution from the ESS sector, ultimately leading to a weakening trend in the overall demand for electrolytes. Supply side, electrolyte enterprises generally adhered to the business strategy of "producing based on sales," with production plans closely aligned with the order pace of downstream battery cell manufacturers. Directly affected by the overall reduction in orders from downstream battery cell manufacturers, the operating rate in the electrolyte industry was simultaneously lowered. Most enterprises proactively controlled production loads and reduced output, effectively avoiding risks of idle capacity and inventory accumulation. As a result, overall electrolyte production declined, forming a supply-demand balance characterized by "contraction in demand followed by synchronous adjustment in supply."
On the price front, electrolyte prices overall increased slightly in January, with the core driving force coming from the lagged transmission effect of raw material costs. Specifically, in January, influenced by the transmission of weakening downstream end-use demand, the prices of core upstream raw materials for electrolytes continued to decline. The continuous decline in raw material prices further suppressed the purchasing willingness of electrolyte enterprises, with most prioritizing the consumption of previously retained inventory. Enterprises without inventory only restocked based on rigid demand, and the sluggish procurement demand further exacerbated the downward trend in raw material prices. Meanwhile, market traders actively reduced prices to accelerate capital recovery, further driving down raw material market prices. However, due to the time lag in cost transmission, the raw materials used by electrolyte enterprises for order production this month were mostly procured at high prices earlier, keeping raw material costs at relatively high levels. Additionally, for some orders signed previously, the high raw material costs were not fully transmitted to product prices, leading to losses on some orders. Against this backdrop, to alleviate profit pressure and achieve partial profit recovery, electrolyte enterprises did not adjust prices in sync with the current decline in raw material costs. Instead, they slightly raised electrolyte prices to offset cost pressures, ultimately driving a slight increase in electrolyte prices in January.
SMM New Energy Research Team
Wang Cong 021-5166-6838
Ma Rui 021-5159-5780
Feng Disheng 021-5166-6714
Lü Yanlin 021-2070-7875
Zhou Zhicheng 021-5166-6711
Xu Mengqi 021-2070-7868
Hu Xuejie 021-2070-7858
Chen Bolin 021-5166-6836
Wang Yizhou 021-5159-5909
![[SMM Analysis] NCM Prices Retreat, But Cathode Buyers Show Limited Stocking Interest](https://imgqn.smm.cn/usercenter/MaxcL20251217171730.jpg)
