In September 2025, China's lithium iron phosphate (LFP) market maintained a high prosperity trend, with both output and demand rising simultaneously, and the industry's supply-demand pattern showing the characteristic of a tight balance.

I. Strong Performance in Output and Operating Rate

According to the latest data, China's domestic LFP output reached 355,800 tons in September, a month-on-month (MoM) increase of 11.62%, hitting a new monthly high for the year. Behind the significant output growth is the industry's sustained high operating rate: leading enterprises generally maintained full capacity or even overcapacity operations, while the operating rates of second and third-tier enterprises increased steadily. The overall production vitality was sufficient, directly confirming the strong driving force of market demand. From the cumulative data perspective, the total LFP output from January to September had reached 2.513 million tons, with a year-on-year (YoY) growth rate of 66%, making the tone of high annual growth clear.

II. Supply-Demand Resonance: Dual Drive of Power and Energy Storage Boosts Industry Growth

On the supply side, enterprises' capacity expansion and production enthusiasm provided effective support. Jiangxi Shenghua, a subsidiary controlled by Fulin Jinggong, accelerated its capacity expansion with the support of a 500 million yuan advance payment from CATL (Contemporary Amperex Technology Co., Limited), pushing its high-compaction cathode capacity toward the 500,000-ton target. The relevant products had already achieved full production and sales in 2024. The 450,000-ton new-generation LFP project of Yichang Bangpu Times progressed smoothly and was expected to be completed and put into production in December, which would further supplement high-end capacity.

On the demand side, a "dual-drive" pattern of "power battery + energy storage" emerged. In the power battery sector, the technological iteration of fast-charging batteries by leading enterprises such as CATL and BYD drove a surge in demand for the fourth-generation high-compaction LFP. The monthly shipment volume of such materials had exceeded 40,000 tons in the first half of the year. Coupled with the "Golden September and Silver October" peak auto sales season and the expansion of the pure electric heavy-duty truck battery swap network, downstream orders continued to increase significantly. The energy storage sector performed even more brilliantly: from January to August, the domestic energy storage bid-winning volume reached 80GW/272GWh, a YoY increase of 191%. The demand for large-capacity cells drove up the procurement volume of materials, and orders had been scheduled until next year.

III. Future Outlook: Certain Growth and Structural Opportunities Coexist

The market growth momentum will continue in October, with the output expected to rise to 373,800 tons, a further MoM increase of 5.06%. The output growth will mainly come from the ramp-up of new capacities and the introduction of new products. In the long run, the industry's 16% capacity growth rate is far lower than the demand growth rate of over 30%, and supply shortages may occur in the fourth quarter (Q4). At the policy level, the implementation of the "Special Action Plan for Large-Scale Construction of New Energy Storage" has further opened up demand space. Combined with CATL and other enterprises locking in capacities for 2026 in advance, the industry's high prosperity cycle will continue. Meanwhile, the supply-demand gap for high-end products such as high-compaction LFP is significant, providing structural opportunities for technology-based enterprises.

In summary, driven by both strong output growth and robust demand, the prosperity of China's LFP market in September continued to rise. The rigid demand in the power and energy storage sectors will drive the industry to achieve sustained growth amid a tight supply-demand balance.

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