Core Viewpoint - The current market changes are primarily driven by unexpected demand, with additives set to benefit from both volume and structural growth, alongside limited supply, indicating a potential bottoming out and upward momentum in the industry [1] Demand Side - The global demand for VC additives is projected to grow significantly, with global power battery shipments expected to reach 1,447 GWh by 2026, maintaining a stable growth rate of around 20% [3] - Domestic and international demand is expected to resonate, with energy storage demand anticipated to exceed expectations, leading to a projected 62% year-on-year growth in global energy storage battery shipments to 822 GWh by 2026 [3] - The overall lithium battery market (including power, storage, and consumer) is expected to expand by 31% by 2026, directly driving the growth of the electrolyte additive market, representing a "demand growth impact" [3] - Structural changes, such as faster growth in energy storage and an increasing share of overseas lithium iron phosphate, are expected to lead to a 64% growth in VC demand by 2026, representing a "demand growth double impact" [3] - FEC is expected to benefit from advancements in fast-charging technology and silicon-based anode technology, with a projected demand growth rate of 29.5% by 2026 [3] Supply Side - The additive industry has experienced over three years of decline, with irrational expansion leading to intense competition and rapid price declines, resulting in cash losses for listed companies in 2024 [4] - Major companies' cash reserves have dropped to historical lows, limiting their willingness to expand production, leading to a more rational industry environment [4] - The low pricing environment is accelerating the exit of underperforming capacities, while downstream electrolyte companies may exhibit stronger purchasing needs due to supply shortages, enhancing price elasticity [4] - The estimated capacity gap for VC in 2026 is projected to reach -16,000 tons, indicating a supply tightness of approximately 15.1%, which is expected to persist throughout the year [4] - FEC is expected to remain in a tight balance, with potential for rapid growth if downstream technologies exceed expectations [4] - Under certain conditions, if VC prices stabilize at 150,000 yuan/ton and FEC at 60,000 yuan/ton, the latest valuations for industry-leading companies are below 12x, indicating a strong safety margin [4]