Vinylene carbonate

Market Dynamics Intelligence on Vinylene Carbonate (VC) in the Near Term

I. Price Trends
1. Domestic Market:
- East China: Mainstream transaction prices range from RMB 120,000 to RMB 125,000 per ton, representing a week-on-week increase of approximately 2.3%. Some premium quotes have reached RMB 128,000 per ton.
- South China: Prices range from RMB 118,000 to RMB 123,000 per ton, with a week-on-week increase of about 1.8%. Due to regional supply tightness, local transaction prices have exceeded RMB 125,000 per ton in certain instances.
- North China: Prices remain stable between RMB 115,000 and RMB 120,000 per ton, with a modest increase primarily due to a slowdown in downstream procurement pace.

2. International Market:
- Asian Market (FOB China): Quotes range from USD 16,500 to USD 17,000 per ton, reflecting a week-on-week increase of approximately 3.2%, driven by domestic price transmission and rising shipping costs.
- European Market (CIF Rotterdam): Prices remain stable between USD 18,000 and USD 18,500 per ton, with limited increases due to sufficient local supply in Europe.

II. Supply and Demand Dynamics
1. Supply Side:
- Domestic Capacity Utilization: Approximately 75%, up by 2 percentage points week-on-week, mainly due to the resumption of some maintenance units. However, the release of new capacity remains slow.
- Import Volume: October import volumes decreased by 15% month-on-month, primarily because overseas suppliers prioritized orders from the US and European markets.
- Inventory Levels: Inventory in East China has dropped to around 1,500 tons, a 30% decrease from the previous month, reaching a historical low.

2. Demand Side:
- Lithium Battery Industry: October power battery production increased by 12% month-on-month, continuously driving demand for vinylene carbonate, particularly in the high-nickel ternary battery sector.
- Pharmaceutical Intermediates: Demand remains stable but accounts for less than 10% of total demand, having limited impact on prices.
- Export Orders: October export volumes increased by 8% month-on-month, with major destinations including South Korea, Japan, and Europe.

III. Costs and Profits
1. Raw Material Costs:
- Ethylene Oxide: Prices remain stable between RMB 6,800 and RMB 7,000 per ton, providing strong cost support for vinylene carbonate.
- Chlorine: Prices have risen slightly to RMB 2,800–RMB 3,000 per ton, pushing production costs up by approximately 2%.

2. Production Margins:
- Current gross margin is approximately 25%, down by 1 percentage point week-on-week, mainly due to rising raw material costs and increased unit costs from partial unit maintenance.

IV. Relevant Policies and Industry Trends
1. Policy Impact:
- Stricter domestic environmental policies have forced some small-capacity units to shut down, further increasing industry concentration.
- The phase-out of new energy vehicle subsidies has had limited impact on end-user demand, with long-term demand continuing to grow.

2. Industry Trends:
- Leading enterprises plan to expand capacity, with an estimated 20,000 tons of new capacity expected to come online in 2024. However, the short-term supply tightness is unlikely to be alleviated.
- Downstream lithium battery companies are accelerating their deployment in the solid-state battery sector, which may have long-term implications for the demand structure of vinylene carbonate.

V. Analysis and Forecasts
1. Short Term (1–2 Weeks):
- Price Trends: Domestic prices are expected to remain high with limited downside, with mainstream transaction prices in East China likely to stay between RMB 120,000 and RMB 125,000 per ton, supported by low inventory levels and robust demand.
- Supply and Demand: Slow progress in supply-side restarts and sustained strong demand mean that the supply-demand imbalance is unlikely to be resolved in the short term.

2. Medium Term (1–3 Months):
- Price Trends: As new capacity gradually comes online, prices may see a slight pullback to RMB 115,000–RMB 120,000 per ton. The extent of the decline will depend on downstream procurement pace and inventory changes.
- Supply and Demand: The supply tightness will gradually ease, but strong demand growth will limit the room for price declines.

3. Long Term (3–6 Months):
- Price Trends: Influenced by the release of new capacity and intensified industry competition, prices may further decline to RMB 110,000–RMB 115,000 per ton, although long-term demand growth will continue to support the price floor.
- Supply and Demand: The industry's supply-demand balance is expected to stabilize, with leading enterprises gaining further market share and price volatility narrowing.

VI. Risk Warnings
1. Significant fluctuations in raw material prices could have a substantial impact on production costs and profits.
2. If downstream demand growth falls short of expectations, the price pullback may exceed forecasts.
3. Stricter environmental policies may further squeeze the survival space of small-capacity units, intensifying industry consolidation.