Possible price hiking per China 7 top LiFePO4 production giants discussion with CIAPS
On Nov. 18th 2025, at the 9th floor of the Information Release Center of the Ministry of Industry and Information Technology - MIIT, representatives from seven lithium iron phosphate enterprises including Hunan YuNeng, Wanrun New Energy, Dynanomic, Anda Technology, Fengy Lienergy, Zhejiang Youshan Technology, and GCL Power, responded to the invitation of the China Industrial Association of Power Sources - CIAPS and came to discuss the issue of the survival of the lithium iron phosphate industry.
"On one hand, there is a 'dual explosion' of demand for new energy vehicles and energy storage; on the other hand, material enterprises have suffered continuous losses for more than three years. The contradictions in this industry have reached a point where they must be resolved." Liu Jiacheng, the deputy General Manager of Anda Technology, pointed out the core dilemma of the lithium iron phosphate industry.
Tang Yan, deputy secretary-general of CIAPS said: "Lithium iron phosphate supports the operation of the entire industry with a positive electrode material shipment ratio of nearly 74%, and the energy storage field has an absolute ratio of 99.9% as the core of the new power system. This is a rare 'global bottleneck' material in the lithium battery field in China."
However, beneath the glamorous industry data, the survival situation of enterprises is not optimistic. From the end of 2022 to August 2025, the price of lithium iron phosphate materials plummeted from RMB 17.3 million/ton to 3.4 million/ton, drop over 80%, and the entire industry suffered losses for more than 36 months, with the average debt ratio of the six listed enterprises reaching 67.8%.
"The current untaxed cost has reached RMB 15,600/ton, while the market average price is only around RMB 14,000/ ton, with a loss of nearly 10% per ton. The upstream ferrous sulfate and sulfur prices are still increasing, and the downstream battery cell factories are pressuring not to raise prices. We have fallen into the dilemma of 'losing money when taking orders, and losing money even when not taking orders'." Wu Runbin, the General Manager of Hunan YuNeng Marketing Company, said.
At the same time, the competition from overseas and the risk of technology leakage are intensifying. South Korea and India have launched the production of second-generation lithium iron phosphate, and after the closure of a certain enterprise in Tianjin, a 300 person R&D team was absorbed by foreign battery enterprises as a whole. The widespread industry losses have also seriously affected the R&D capabilities of enterprises.
How to break through? This became the core & hot topic in the meeting. The demand for lithium iron phosphate is "explosive". The core application scenarios of lithium iron phosphate are experiencing dual expansion. In the domestic market, the penetration rate of new energy vehicles has exceeded 45%, although the growth rate has shifted from a high-speed period to a stable period, but the mandatory national standard for batteries in the implementation of power vehicles in 2026 clearly requires "no fire or explosion within two hours after a vehicle collision", the strict safety standards further highlight the advantages of lithium iron phosphate. "Compared with ternary materials, the thermal stability of lithium iron phosphate can better meet the strict safety requirements, which is equivalent to adding a 'safety lock' for its application in passenger vehicles." Zhou Bo, the secretary-general of the Lithium Iron Phosphate Materials Branch of CIAPS said, "It is expected that the demand for lithium iron phosphate in new energy vehicles will increase by more than 30% next year."
The energy storage field has become "new engine" in demand growth. In 2025, the domestic installed capacity of energy storage will increase by 60% year-on-year predicted by Morgan Stanley and with global shipment of energy storage batteries increase by 30% in 2026, there is vast space of overseas markets, the demand for lithium iron phosphate materials will increase by million of tons in the next two years.
Liu Jiacheng said: "This year, the demand is approximately 3.7 million tons, and next year, it is expected to reach 5.1 to 5.3 million tons. The penetration rate of energy rate per EV, the proportion of energy storage, and the penetration rate of commercial vehicles will continue to increase."
Currently, China's lithium iron phosphate products have occupied a dominant position in the global market due to their technological, cost, and industrial chain advantages. Although some countries have attempted to restrict Chinese products through policies such as "de-risking" of Chinese components， the price advantage still makes the purchasing demand tilt towards China. From Jan. to Sept. 2025， China's export volume of lithium-ion batteries reached USD 55.38 billion, a 26.75% increase. Europe， Asia， and North America accounted for 90% of China's LFP battery exports, and Germany has replaced USA as the largest export market.
"Korean enterprises have been following China's lithium iron phosphate technology, but their product prices cannot be as low as those in China. Even with tariff regulations, the price difference between Chinese and Korean products is still more than double." Zhou Bo said. Additionally, the overseas expansion heat of Chinese enterprises has also driven the export of local materials. Apart from the 50,000 tons of capacity of Changzhou Lithium Source in Indonesia, the rest has not yet been built, and it will be difficult to meet the demand in the short term.
Hunan YuNeng, with its all-chain layout of "phosphate mining - phosphate production", can save 1,500 yuan per ton in product, and its direct costs and period costs are 400-500 yuan lower per ton than peers. This technology and industrial chain advantage have made China's lithium iron phosphate a core material that is "a global bottleneck".
Moreover, China's LFP technology is in one step ahead in generations. The current third -generation products being promoted are one generation ahead of those of South Korea and India's second-generation products. The cost of overseas enterprises is about RMB20,000 yuan per ton, while China's cost is significantly lower through technological optimization and scale effect.
In terms of forward-looking technologies, the research and development of high-pressure density and cobalt-free lithium iron phosphate technologies is continuing. LFP materials are classified into 5 generations based on compact density. The current market is upgrading from the 4th generation (2.6-2.7g/cm³) to the 5th generation (2.7g/cm³ and above). The incremental production of 4th-generation LFP is expected to exceed 50% in 2026, and the 5th-generation products have also entered the research stage & China still maintains a significant lead globally.
Capacity idling and "both ends squeezing"
It is an issue that the chaotic competition in China phosphate iron lithium industry caused big problem. In 2024, the industry's capacity reached 4.7 million tons, with a year-on-year growth of 34%, but the actual output is only 2.3 million tons, with capacity idle rate is less than 50%. Only Hunan Yugen and Jiangxi Shenghua have achieved profitability in the entire industry. Some enterprises have a debt ratio even higher than 80%, facing the risk capital chain rupture.
Zhou Bo said: "Through special audits of the 7 leading enterprises with a cumulative market share of 74%, we found that the industry's average cost is approximately RMB 15,600 - 16,200 per ton, while the current market average price is only RMB 14,770 per ton, which is 9.7% - 15.3% lower than the cost. For each ton of product sold, enterprises will suffer a loss of nearly 1,000 yuan." Even if the leading enterprises reach full production in the first half of 2025 and their orders extend to 2026, the cost pressure has not been alleviated.
Regarding the reason for the price inversion, Deng Song, the chief marketing officer of GCL Power, said: "The industry has suffered consecutive losses for 3 years, not because enterprises are unwilling to raise prices, but after the capital boom in 2022, some enterprises made huge profits, but they did not expect the price to plummet sharply in 2023. So everyone desperately cut their losses to protect themselves, and the scale of battery cell factories continued to expand, weakening the bargaining power of material factories. Eventually, it was difficult to dominate the pricing."
Compared to the capacity issue, what makes LFP enterprises more unacceptable is that the upstream raw materials have significantly price increase, but the downstream battery cell enterprises do not accept price hiking. "The main problem is that both ends are suffering. The manufacturers of lithium iron phosphate materials have enhanced their bargaining power and will not accept price increases without providing raw materials; while the downstream battery cell factories require that they must deliver on schedule, and the cost increase of raw materials is not related to them. Once there is a delay in delivery, they will issue fines." Wang Yuanhang, the assistant of the chairman of Dynanomic, told Economic Observer.
"The prices of basic chemical raw materials such as ferrous sulfate, sulfuric acid, and ammonia water have risen rapidly. For these three raw materials alone, our company's product costs have increased by nearly RMB 3,000 / ton." Wu Runbin said: "Take ferrous sulfate as an example. The annual output of this industry is only half suitable for the lithium iron phosphate industry. They are all used in higher-priced fields such as paper mill and water treatment. Industry insiders predict that the price may rise to RMB 800 per ton next year."
At the downstream end, battery cell factories continue to drive down prices by leveraging their scale advantages. Leading companies such as CATL and BYD have changed their previous centralized bidding model and adopted a "one-by-one negotiation" approach, demanding that material enterprises lower their prices.
The huge market potentials have also attracted cross-border players such as phosphorus chemical and titanium dioxide powder enterprises. Deng Song said that traditional enterprises initially had only one production line of 1,000 tons, and even the one built in 2022 only had a capacity of 10,000 tons. However, the new entrants have larger equipment scales, with some single lines having 80,000 tons capacity, and the unit cost is lower. Moreover, these enterprises are backed by large groups, have more accessible financing channels, and contrast sharply with the financing difficulties faced by traditional material enterprises.
At the same time, overseas enterprises are accelerating their pursuit by poaching technical teams. After Tianjin Jiewei Power Dynamics -JEVE went bankrupt due to capital chain rupture, its 300-person R&D team was fully absorbed by Korean LG, directly advancing the development progress of the Korean company's lithium iron phosphate batteries by one and a half years. It is expected that its multiple factories in the United States will start mass production of LFP batteries in the second half of 2026.
| In July this year, China government banned the export of concentrated density ≥ 2.58g/cc of lithium iron phosphate. Zhang Le, the chief capital operation officer of Wanrun New Energy, said that lithium iron phosphate also has strategic significance. For the industry to continuously lead global technological development, it must ensure reasonable profits to support R&D investment. In 2024, Wanrun New Energy's R&D expenses were 257 million yuan, and in the first three quarters of 2025, they were 185 million yuan. The overall industry suffered a loss of several billion yuan, which has seriously affected R&D capabilities. |  |
In this context, CIAPS established the LFP Material Branch this May, and began to jointly conduct audits & research on material costs with the above-mentioned 7 leading enterprises. With a third-party certified accountant conducting special audit of each enterprise for 15 days, the real cost of materials were clarified via three calculation models: the average cost of mainstream enterprises, the weighted market share method, and the weighted production capacity method.
The LFP Material Branch will also collaborate with third-party institutions such as Shanghai Nonferrous Metals Exchange to publish monthly industry cost ranges and market average prices on authorized financial platforms, clearly indicating the deviation between the market average price and the cost. Zhou Bo said, "The cost index can provide transparent value references for enterprises, help them set reasonable prices, curb vicious competition below cost, and also provide data support for government regulation, making policy regulation more precise and efficient."
Lu Jialong, the CEO of Shanghai Nonferrous metal network said that in fact, downstream battery factories have a very clear understanding of the costs of material enterprises. Therefore, relying solely on the cost index is not enough. To fundamentally change the predicament, it is necessary to start from economic logic and control the expansion of production capacity. Lu Jialong believes that the association can jointly promote the "industry access mechanism" with the MIIT to curb the entry of low-tech capacity from cross-border enterprises and guide the orderly exit of inefficient capacity from the supply side to improve the problem of overcapacity.
The LFP enterprises generally agree with this view. "As long as we unite and collectively raise prices, the battery cell enterprises will have no choice but to follow" a representative of a lithium iron phosphate enterprise told Economic Observer. Han Sulin, the marketing manager of Changzhou Liyuan, said, "The price must go up. Many enterprises are actually suffering more severe losses than those mentioned in the meeting.
In fact, some lithium iron phosphate enterprises have already been controlling their production capacity." Zhou Lingling, the marketing manager of Zhejiang Youshan, said that we should maintain self-restraint in our actual production. Zhejiang Youshan plans a production capacity of 400,000 tons. But in the past few years, we have been operating at full capacity, producing 25,000 tons of products every month. From a long-term perspective, the price increase of lithium iron phosphate is inevitable.
Once overseas enterprises rush to increase production capacity, the domestic price is bound to rise. In addition, lithium iron phosphate enterprises and cell factories have been tentatively raising prices. On Nov. 7th, an analyst from Huatai Securities published an article stating that CATL agreed to increase the price of all lithium iron phosphate products by 1,000 yuan per ton. Later, the researcher issued a clarification letter to apologize. "In fact, the price increase is true. However, it was warned by the downstream and cannot go public," Zhou Bo said.
Currently, the core enterprises of lithium iron phosphate still have a gap of about 500,000 tons in production capacity v.s. market demand. "The top 7 enterprises have some reserve production capacity, but no inventory; at the same time, the demand for batteries from car manufacturers will increase significantly next year," Zhou Bo said.
Therefore, as long as these 7 core lithium iron phosphate enterprises do not experience large-scale production cuts, battery enterprises must accept a reasonable increase in material prices based on the continuous strong demand for new energy and energy storage. "It is expected that they will raise prices once by the end of 2025, and there may be another one or two times in the first half of 2025. This will basically solve the profit loss problem," Zhou Bo said.