Electrolyte Solvent Demand Recovers Driven by Energy Storage Market, Carbonate Products Q2 Operating Rate Rises to 65%
As energy storage battery production continues to rise, the electrolyte solvent market has seen a notable recovery entering the second quarter. According to industry monitoring data, as of mid-April, the overall operating rate of carbonate solvents represented by dimethyl carbonate (DMC), ethylene carbonate (EC), and ethyl methyl carbonate (EMC) has rebounded to approximately 65%, an increase of about 8-10 percentage points from the low point in the first quarter. Industry sentiment is showing a phased recovery driven by strong energy storage demand.
I. Demand Side: Energy Storage Becomes the Core Growth Engine
The most notable feature of this round of solvent market recovery is the significantly increased contribution of the energy storage market.
According to industry data, battery enterprise production surged approximately 22% month-on-month in March 2026, with energy storage battery cells accounting for over 40% of the total. Energy storage battery sales from January to February increased by 108.9% year-on-year, becoming the core incremental source of electrolyte demand. Entering the second quarter, leading energy storage battery companies' production plans generally show a 15%-20% sequential increase, directly driving upstream electrolyte and solvent demand.
Meanwhile, the power battery market is also showing a moderate recovery. China's new energy passenger vehicle retail penetration rate climbed to 44.9% in February 2026. Consumers' pursuit of long range and fast charging performance is forcing power battery companies to continuously upgrade cell systems, accelerating the explosive demand for high-quality electrolyte solvents.
Institutional research reports estimate that global lithium battery demand will reach 3,065 GWh in 2026, a year-on-year increase of 33.7%. Among them, the non-linear growth of energy storage systems is becoming another strong growth pole of the industry. Against the backdrop of global energy structure transformation, coupled with policy dividends such as the implementation of capacity pricing mechanisms, energy storage installation willingness has received unprecedented stimulation.
II. Supply Side: Operating Rate Bottoming Out and Rebounding, Effective Capacity Tightening
Since entering 2026, the carbonate solvent industry experienced a period of adjustment in the first quarter. Due to seasonal factors such as the Spring Festival holiday and downstream demand fluctuations, the industry's overall operating rate fell below 55% in January-February.
Since mid-March, with the recovery of downstream battery production and the release of restocking demand, solvent enterprises' operating rates have been rising week by week. As of now, the industry's overall operating rate has recovered to approximately 65%. It is worth noting that after two years of price wars and capacity consolidation, inefficient capacity has gradually exited the market, and the solvent segment is showing a state of "nominal surplus, effective shortage," with leading enterprises generally operating at 75%-85% capacity.
Looking at specific product varieties, performance varies among different solvents:
| Variety | Current Operating Rate | Change from Q1 Low | Main Driver |
|---|---|---|---|
| Dimethyl Carbonate (DMC) | 60%-65% | +7-8 ppts | Industrial grade demand recovery |
| Ethylene Carbonate (EC) | 70%-75% | +10-12 ppts | Energy storage order support |
| Ethyl Methyl Carbonate (EMC) | 65%-70% | +8-10 ppts | High-end battery requirements |
III. Price Side: Stabilization and Rebound
Driven by the gradual recovery in demand, carbonate solvent prices have shown signs of bottoming out and stabilizing.
Industrial Grade DMC: East China market reference price is RMB 3,800-4,000/ton
Battery Grade EMC: Remaining in the RMB 6,800-7,200/ton range
Battery Grade EC: Quoted at RMB 5,200-5,500/ton
It is worth noting that with the continued increase in downstream energy storage orders, there is strong willingness among solvent enterprises to raise prices. Industrial grade DMC prices have seen small increases of RMB 50-100/ton recently. Overall, the market is currently in a phased price repair stage.
IV. Outlook: Cautiously Optimistic
Looking ahead to the second quarter and the second half of the year, multiple institutions hold a cautiously optimistic view of the solvent market.
On the positive side: With the continued release of demand from the energy storage market and the power battery market entering the traditional peak season, coupled with the reduced inventory pressure in the solvent industry, the market is expected to maintain a warming trend. It is expected that the operating rate of carbonate solvents will further increase to around 70% in the second quarter.
On the risk side: Overcapacity in the domestic solvent industry remains a long-term constraint. Attention should be paid to the pace of new capacity releases in 2026. In addition, fluctuations in raw material propylene oxide prices may also affect the profitability of solvent companies.
In summary, energy storage has become a new driving force for the growth of the electrolyte solvent market. In the medium to long term, the solvent industry is expected to achieve a balance between supply and demand and improvement in profitability, driven by the continued expansion of the energy storage market and ongoing industry consolidation.
