[SMM Analysis] Electrolyte and LiPF6 Chinese New Year Holiday Review and Post-Holiday Outlook

LiPF6: Trading activity for LiPF6 essentially halted during the Chinese New Year holiday. In the final week before the holiday, market trading was already quite sluggish, with procurement and sales willingness among buyers and sellers significantly pulling back. Market prices remained stable without significant fluctuations. Supply side, the MoM decline in production is expected to widen further in February. The core reasons are twofold: firstly, previous market prices had already fallen significantly due to weak procurement sentiment downstream, dampening producer enthusiasm; secondly, reduced production days in February, coupled with planned maintenance at some enterprises, further contracted effective industry supply. Demand side, market demand showed a seasonally weak trend in February. Downstream electrolyte and battery cell enterprises, affected by a phase of declining NEV sales, saw orders shrink. Combined with fewer production days in February, procurement demand for LiPF6 decreased correspondingly. Overall, the LiPF6 market is expected to show a pattern of weak supply and demand in February. As the Spring Festival holiday concludes, the industry is expected to enter a production resumption phase. Subsequent market focus will center on the pace of production resumptions at downstream electrolyte enterprises and the actual extent of recovery in end-user NEV and energy storage demand, which will directly determine LiPF6 prices and the intensity of supply releases.

Electrolyte: The electrolyte market also performed sluggishly during the Spring Festival holiday. Supply side continued the core logic of producing based on sales, with the MoM decline in electrolyte production expected to widen further in February. Directly impacted by order reductions from downstream battery cell manufacturers, electrolyte producers generally scaled back production schedules during the holiday, leading to a decrease in the industry operating rate and production contracting in line with order volumes. Demand side, February market demand was suppressed by dual factors. Firstly, decreased end-user NEV sales led to significantly weaker electrolyte demand in the power battery sector; secondly, fewer working days in February caused battery cell enterprises to slow their procurement pace, further dragging down overall electrolyte demand. The trend of simultaneous contraction in market supply and demand in February is clear. After the holiday, the electrolyte industry's resumption of work and production, along with price trends, will face dual tests: on one hand, tracking the recovery speed of end-user NEV and energy storage demand, which is the core factor determining order recovery; on the other hand, closely monitoring price fluctuations of upstream raw materials like LiPF6, whose cost-pass-through effect will directly impact electrolyte prices.

SMM New Energy Research Team

Cong Wang 021-51666838

Rui Ma 021-51595780

Disheng Feng 021-51666714

Yanlin Lü 021-20707875

Zhicheng Zhou 021-51666711

Mengqi Xu 021-20707868

Xuejie Hu 021-20707858

Bolin Chen 021-51666836

Yizhou Wang 021-51595909