SunSirs: Booming Production and Sales, Rising Prices: Lithium Iron Phosphate Industry Sees Wave of Order Lock-Ins and Capacity Expansion

Since 2025, the lithium iron phosphate industry has witnessed robust recovery, presenting a prosperous scene of “booming production and sales.” Many leading companies have seen surging orders, with production lines operating continuously at full capacity. Entering December, several major lithium iron phosphate enterprises have proposed price increases, while others are accelerating capacity expansion.

The industry's dual momentum in production and sales, coupled with rising volumes and prices, reflects long-term trends in shifting demand structures and technological evolution. Supported by dual-scenario demand from power batteries and energy storage, the sector is transitioning from scale competition to value-driven competition.

Robust Market Production and Sales

Since the third quarter, strong production and sales of lithium iron phosphate have become a widespread industry phenomenon.

For instance, on December 5, Beijing Dangsheng Materials Technology Co., Ltd. disclosed on a public interactive platform that its lithium iron phosphate business is currently experiencing robust production and sales while achieving profitability. The company has become a strategic supplier to mainstream domestic lithium iron phosphate battery manufacturers, with its terminal application market primarily focused overseas.

Sustained growth in the power battery and energy storage markets has driven continuous increases in LiFePO₄ cathode material shipments. Data released by the China Automotive Power Battery Industry Innovation Alliance shows that from January to November, China's cumulative LiFePO₄ battery installations reached 545.5 GWh, accounting for 81.2% of total installations and representing a year-on-year increase of 56.7%.

Recently, several LFP battery manufacturers have been considering price increases, with many leading companies already adjusting their product pricing. On December 1, a leading industry manufacturer disclosed an investor relations activity record. When asked about the basis for its price increases, the company stated that it was primarily driven by market conditions where supply could not meet demand, particularly for new product lines where supply-demand imbalances were pronounced. Additionally, pressure from rising prices of certain raw materials prompted the company to actively engage in commercial negotiations with clients, which have yielded positive results.

As LFP prices rise, lithium battery manufacturers previously operating on slim margins stand to improve profitability. For some companies, their LFP businesses have shifted from losses to profits following the price hikes.

Notably, accelerated product iteration is driving rapid advancements in high-density LFP cathode materials. High-density LFP, recognized as a key enabler for enhancing battery energy density, is highly sought after in the market, fueling exceptionally strong demand.

From an industry competition perspective, the rise of high-density LFP has profound implications. On one hand, leading companies leverage technological and scale advantages to secure favorable market positions. For instance, some top players have seen substantial order volume increases and are actively expanding production facilities to meet demand. On the other hand, small and medium-sized enterprises face greater challenges. Due to high technical barriers and significant cost pressures, some SMEs may be forced out of the market, potentially leading to further industry consolidation.

Industry Sees Wave of Order Lock-Ins and Capacity Expansions

Faced with robust market demand, the lithium iron phosphate sector has seen a flurry of order lock-ins and capacity expansion announcements.

On the evening of December 2, Jiangsu Longpan Technology Group Co., Ltd. announced that its controlled subsidiary, Lithium Source (Asia-Pacific), signed a “Long-Term Purchase Agreement” (hereinafter referred to as the “Agreement”) with Sunwoda. The Agreement stipulates that Lithium Source (Asia-Pacific) is expected to supply Sunwoda with a total of 106,800 metric tons of lithium iron phosphate cathode materials meeting mutually agreed specifications between 2026 and 2030. It specifies minimum purchase volumes and maximum supply capacities, with both parties agreeing to recalibrate demand parameters every two years. The recalibrated demand shall not fall below the minimum annual purchase volume stipulated in the Agreement.

On December 11, Hunan Yueneng New Energy Battery Materials Co., Ltd. (hereinafter referred to as “Hunan Yueneng”) announced that it had received a review opinion notification letter from the Listing Review Center of the Shenzhen Stock Exchange. The company's application for a private placement of shares to specific investors has been approved. Subsequent registration procedures will be carried out with the China Securities Regulatory Commission in accordance with regulations.

It is understood that the company plans to raise no more than RMB 4.788 billion through this private placement, with core investments directed toward expanding production capacity for cathode materials such as lithium iron phosphate and lithium manganese iron phosphate, as well as supplementing working capital.

The current expansion wave in the lithium iron phosphate industry is characterized by high-end, integrated, and internationalized features. Moving forward, competitive advantages in technology, supply chain management, cost efficiency, and overseas expansion will be key factors determining success for relevant enterprises in this round of competition.

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