[Edaily Reporter kyoungeun kim ] Analysts predict that domestic battery manufacturers will see increased opportunities to secure orders following reports that Chinese energy storage system (ESS) companies are considering withdrawing from the U.S. market. With the U.S. “Prohibited Foreign Entities (PFE)” regulations taking full effect, domestic cell manufacturers are expected to benefit structurally in the medium to long term.

In a report released on the 20th, Yoo Ji-woong, an analyst at Daol Investment & Securities, maintained an “Overweight” investment rating for the rechargeable battery sector, stating, “Momentum in the rechargeable battery sector has accelerated following a report by the Taiwanese media outlet DigiTimes yesterday.” DigiTimes reported that Chinese ESS companies are considering withdrawing from the U.S. market.

Analyst Yoo explained, “This suggests that domestic battery manufacturers’ opportunities to secure orders may expand following the implementation of regulations targeting Non-PFE (Non-Preferred Foreign Entity) entities,” adding, “Starting this year, Chinese ESS manufacturers already operating in the U.S. are subject to both additional tariffs under Section 301 of the Trade Act and PFE restrictions on the 48E Investment Tax Credit (ITC) under the Inflation Reduction Act (IRA), making it increasingly difficult for them to maintain profitability.”

He predicted that the three major domestic cell manufacturers would benefit immediately. Researcher Yoo forecast, “Since domestic cell manufacturers’ ESS market share in the U.S. is currently below 30%, the benefits are expected to grow structurally over the medium to long term.” As of last year, China accounted for an overwhelming 63.5% of U.S. imports of lithium-ion batteries for non-electric vehicle applications, while South Korea’s share stood at just 11.4%. Analyst Yoo added, “Schneider, one of the domestic companies’ Chonbang customers, recently confirmed a clear upward trend in demand by raising its guidance following the announcement of double-digit growth in data center sales during its third-quarter earnings report.”

Among materials companies, he singled out POSCO FUTURE M as a top pick. Analyst Yoo stated, “With numerous catalysts emerging in Chonbang industries, we place greater weight on the possibility that materials companies will see a valuation re-rating first,” and “Although earnings expectations for the second half have been lowered due to a revenue mix focused on ternary materials such as nickel, cobalt, and manganese (NCM), the momentum in orders for lithium iron phosphate (LFP) cathode materials could continue, meaning expectations for 2027 may continue to rise,” he said.