Power Equipment and New Energy — Battery and Electrical Systems Series (128): Higher Unit Consumption Plus Supply Tightness Give VC Prices Upside
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China Merchants Securities keeps its Recommended rating on power equipment and new energy, arguing vinylene carbonate (VC) supply will stay short with strong price and profit elasticity. VC averaged RMB225,000 per tonne by August 14, 2026—up more than 70% since June and roughly four times the ~RMB46,000 low of July-August 2025, yet far below 2021's ~RMB475,000 peak. The immediate catalyst was the shutdown of Suzhou Huayi's 10,000-tonne Dalian capacity.
Demand: global lithium-battery shipments grow from 2,257.0GWh in 2025 to 3,584.2GWh in 2027, and July 2026's new national safety standard lifts VC dosing, taking average unit consumption from 29.8 to 37.8 tonnes per GWh and global VC demand from 67.2kt to 135.6kt (about 42% CAGR). Supply: nameplate capacity reaches 402.0kt by 2027, but harder second-generation short-process technology stretches ramp-up and certification, capping effective supply at 117.3kt; modeled balances are -5.6kt in 2026 and -18.3kt in 2027. At current prices VC is about 1.9% of cell value, leaving room for downstream absorption. Tinci Materials is Strongly Recommended and Haike Xinyuan Overweight; the report also flags Huasheng Lithium, Rike Chemical, Yongtai Technology, Sunvim and Fushiang Pharmaceutical (not rated).
Key exhibits
Exhibit 1
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Exhibit 3
