The A-share market witnessed a broad rally on Thursday, with the lithium battery sector leading the charge. From electrolytes and separators to cathode/anode materials and upstream lithium resources, all sub-sectors surged, with some battery ETFs soaring over 7%. Over 30 lithium-related stocks hit their daily 10% limit-up, with more than half linked to the electrolyte additive VC (vinylene carbonate), including Furi Technology (002083), Haike New Resources (301292), Yongtai Technology (002326), Huasheng Lithium (688353), Taihe Technology (300801), Tinci Materials (002709), Shida Shenghua (603026), Fuxiang Pharma (300497), Kangpeng Technology (688602), Lianhong New Materials (003022), Jianye Chemicals (603948), Shenzhen Capchem (300037), Wanrun New Energy (688275), Hunan Yuneng (301358), and Kaisheng New Materials (300841).

On November 12, battery-grade VC prices skyrocketed to 100,000–120,000 yuan/ton, up 40,000–60,000 yuan from the previous day—a single-day surge exceeding 50% and a three-year high. This reflects a supply-demand imbalance in the new energy supply chain, driven by explosive growth in energy storage demand and sluggish VC capacity expansion.

Vinylene carbonate (VC), a crucial film-forming additive in lithium battery electrolytes, forms a stable SEI layer on the anode during initial charging, directly impacting battery cycle life, safety, and high-temperature stability. With the energy storage market outperforming expectations and the rising market share of LFP batteries (VC usage: 4–6%, versus 1–2% for ternary batteries), VC demand has surged. However, years of industry losses delayed capacity expansion, creating a supply-demand gap that has propelled prices upward.

Adding to the supply crunch, Shandong Ganyuan—one of the largest VC producers globally, holding ~40% of capacity—announced a production halt for maintenance on November 12. With electrolyte manufacturers and battery firms holding inventories below 10 days, some are resorting to on-site procurement. The energy storage battery boom (VC usage: 4–6%) and LFP battery demand (usage: 4%+) are expected to widen the global VC shortage to 12,000–15,000 tons in 2025, potentially reaching 20,000 tons by 2026.

Among lithium battery materials—cathodes, anodes, separators, and electrolytes—additives like VC, FEC, and PS are critical. VC and FEC dominate 65% of the additive market. Notably, VC prices surged from 48,000 yuan/ton in September to 100,000–120,000 yuan/ton on November 12, a 68% jump. Despite VC accounting for just 3–5% of electrolyte costs in LFP batteries, downstream sensitivity to price hikes is low. For instance, a 1GWh LFP battery sees only a 0.32% total cost increase from higher VC prices, which automakers and energy storage projects can absorb.

The VC price surge stems from a triple whammy: booming energy storage demand, rigid supply constraints, and smooth cost pass-through. Short-term supply tightness is unlikely to ease, keeping prices elevated.

Stock performances underscore the frenzy: Furi Technology (002083) has logged six straight limit-ups, Haike New Resources (301292) doubled in six sessions, Huasheng Lithium (688353) surged 120%, while Yongtai Technology (002326) and Fuxiang Pharma (300497) each gained over 60%. Shida Shenghua (603026) and Kangpeng Technology (688602) rose nearly 45%.

Amid this backdrop, undervalued VC-related stocks may offer catch-up potential. For example, Rike Chemical’s subsidiary Shandong Huihengda New Materials plans to produce 5,000 tons/year of VC, 7,000 tons/year of FEC, and 30,000 tons/year of CEC upon project completion.

Rike Chemical, founded in 2003, is a listed plastic additives firm with multiple subsidiaries. In February 2023, it announced a joint venture to build a 60,000-ton/year lithium battery electrolyte raw material project, including VC, FEC, and CEC production lines. The company emphasized VC’s role as a core electrolyte additive, enhancing battery performance and safety, aligning with its strategic push into the EV and energy storage sectors.

The VC concept has undeniably become a market hotspot, making related stocks—especially those yet to rally—worth monitoring.