Orders for lithium iron phosphate (LFP) have surged, driving prices to double in less than a year, reaching 60,000 RMB/ton. The LFP market has recently experienced tight supply-demand dynamics; prices have nearly doubled over the past year, climbing from approximately 30,000 RMB/ton to their current level of around 60,000 RMB/ton.

Since the beginning of this year, downstream demand—particularly from the energy storage and new energy vehicle sectors—has been on a steady rise. Benefiting from their superior performance and cost-effectiveness, LFP batteries have enjoyed robust sales, now accounting for approximately 80% of domestic shipments of lithium-ion battery cathode materials. As downstream demand has picked up, order volumes for upstream manufacturers have skyrocketed; indeed, many companies now have order backlogs extending all the way to the end of this year.

Rising prices for upstream raw materials have directly driven up the cost of LFP. The spot price for battery-grade lithium carbonate has now climbed to approximately 205,000 RMB/ton—more than triple the low point recorded in June 2025. According to statistical data, total domestic LFP shipments in the first quarter of 2026 reached approximately 1.23 million tons, representing a year-on-year increase of nearly 60%. In April, the installed capacity of LFP batteries reached 50.8 GWh, accounting for 81.5% of total installed capacity—a record high for market share.

The LFP industry is currently exhibiting clear signs of divergence: high-end production capacity is insufficient to meet demand—with some manufacturers unable to fulfill all incoming orders even while operating at full capacity, prompting them to seek financing for expansion—while utilization rates for low-end production lines remain below 50%. The industry's competitive landscape has fundamentally shifted from a battle for production volume to a battle for technological superiority. Consequently, the cost pressures resulting from these price hikes are now beginning to ripple downstream toward the end-product vehicle manufacturers.

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