LFP material production capacity and price trend in 2022

LFP battery market continues to heat up

The LFP battery market is still hot, and the upstream material investment and production expansion are rushing forward. And the main related manufacturers are TOP 10 lithium iron phosphate power battery manufacturers.

In 2022, the limelight of lithium iron phosphate is still strong. From January to April, the output of lithium iron phosphate batteries firmly occupies more than 50% of the market share in the power battery field. The data shows that from January to April, the installed capacity of lithium iron phosphate power batteries was nearly 32GWh, a year-on-year increase of 222.8%.

Facing 2025, driven by the growth of the global power and energy storage market, the proportion of lithium iron phosphate materials in lithium battery cathode materials is expected to remain above 50%; In the power lithium battery market, China’s lithium iron phosphate battery is expected to account for more than 60%. It is estimated that the global demand for lithium iron phosphate materials will exceed 3 million tons in 2025. The following is the production process of lithium iron phosphate energy storage battery：

The magnitude evolution of the demand side has stimulated supply-side enterprises to expand their production capacity wildly. Since 2021, in addition to traditional lithium iron cathode materials, including ternary cathode material companies, phosphorus chemical, titanium dioxide chemical companies and cross-border players have also joined the expansion of lithium iron phosphate materials.

According to incomplete statistics, In 2021, China’s lithium iron phosphate planned projects will exceed 3 million tons, and the planned projects in 2022 will be superimposed, and the total planned production capacity will exceed 5.4 million tons, far exceeding the market demand in 2025.

In 2021, China’s lithium iron phosphate production capacity will be close to 970,000 tons. With the release of new production capacity this year, it is expected to reach 3 million tons by the end of the year. Overcapacity of LFP materials is imminent.

The concentrated release of production capacity may once again bring about a reshuffle of the industry. Only manufacturers with process technology, cost control advantages and binding downstream customers can stand and continue to share in the market.

Overcapacity of LFP materials is looming

The market heat has led to the large-scale expansion of lithium iron phosphate materials. With the intensive release of new production capacity, overcapacity has begun to cause concerns in the industry.

A significant trend is that compared with previous years, the production and expansion of lithium iron phosphate will be faster and larger in 2021-2022, and new enterprises will be actively pouring in.

In 2021, China’s lithium iron phosphate production capacity will be about 970,000 tons, and the new production capacity will be released in 2022, approaching 2 million tons. The total lithium iron phosphate planned to exceed 6.1 million tons and the iron phosphate production capacity plan to exceed 5.7 million tons.

From the perspective of the main body of production expansion, it is mainly divided into four forces: One is the traditional lithium iron phosphate cathode material enterprises represented by Hunan Yuneng and Hubei Wanrun; The second is ternary material enterprises represented by GEM, Huayou Cobalt and Zhongwei;

The third is the phosphorus chemical industry and titanium dioxide enterprises represented by Longbai Group, Chuanfa Lomon and Jinpu Titanium Industry; the fourth is the cross-border enterprise of comprehensive chemical type such as Wanhua Chemical.

Among them, the newly added annual production capacity in 2022 mainly includes 370,000 tons of Hunan Yuneng, 200,000 tons of Longbai Group (Bailey New Energy), 190,000 tons of German Nanometer, 100,000 tons of Longpan Technology (Changzhou Lithium Source), Peking University Xianxing, Rongtong Hi-Tech, Fulin Precision (Jiangxi Shenghua), and Hunan Bangsheng added a total of 490,000 tons.

At the same time, the production capacity of lithium iron phosphate upstream material iron phosphate is also being released rapidly, and it is expected that Q4 will be able to match the market supply demand.

It can be seen that the overcapacity of LFP materials is imminent, the integrated projects will be the first, the rapid expansion of production, the cost advantage, and the deep binding of the downstream enterprises will be expected to enjoy the market dividends in the high prosperity stage of the industry.

Taking Hubei Wanrun as an example, traditional enterprises rely on leading power battery companies such as CATL, BYD, China Innovation Aviation, and Yiwei Lithium Energy on the basis of technology and production capacity advantages. The first camp in the lithium iron phosphate market.

In terms of new entrants, Longpan Technology quickly entered the LFP material market through the acquisition of Changzhou Liyuan. The recently launched “Iron Lithium No. 1” solved the problem of low Li+ diffusion coefficient and achieved a technological breakthrough in LFP ultra-low temperature and ultra-high rate.

Longbai Group relies on the mastery of industrial chain resources to realize the integrated layout of the industrial chain and create a product cost advantage. At present, it has expanded its customer circle of friends in the field of power batteries.

At present, the deep binding of power battery companies including Top 10 power battery companies and lithium iron phosphate material companies has become a common phenomenon in the industry, including signing long-term orders, capital investment, joint venture construction and other forms.

For example, the LiFePO4 enterprises deeply bound by CATL include Hubei Wanrun, Longpan Technology (Changzhou Liyuan), Defang Nano, Fulin Precision (Jiangxi Sublimation), etc.; Yiwei Lithium Energy and Defang Nano have established a joint venture company; BAK and Gateway Power have successively signed long orders for positive and negative poles with Longbai Group.

It is worth mentioning that most of the above-mentioned expansion projects are still in the preliminary planning and approval stage, and the actual progress remains to be discussed. At the same time, whether the EIA and energy consumption indicators can be passed will also affect the progress of the project, and most of the above-mentioned production capacity will be greatly reduced.

In addition, the actual production capacity of upstream lithium carbonate and iron phosphate may further affect the release of lithium iron phosphate production capacity.

And the first enterprises to realize the release of production capacity are also expected to quickly occupy the market.

Price trend of lithium iron phosphate in 2022

From the perspective of price trends, in the first quarter of 2022, the price of upstream lithium carbonate continued to rise, resulting in a year-on-year increase of more than 100% in the price of lithium iron phosphate, an increase of more than 55% from last year’s Q4, and the soaring quotation exceeded 160,000 RMB/ton.

In the second quarter, the price of lithium iron phosphate material began to loosen. At present, it has dropped from the high price of 169,000 RMB/ton in April to about 155,000 RMB/ton.

The reason is that, on the one hand, due to the high price of lithium carbonate, which squeezes downstream and terminal profits, the battery side puts pressure on the price of lithium iron phosphate enterprises, which makes lithium iron phosphate enterprises less motivated to purchase raw materials.

On the other hand, due to the impact of the epidemic on the operation of terminal car companies and logistics transportation, the operating rate of battery factories has declined, and the impact of weakened demand has been transmitted upward, and the price of lithium iron phosphate materials has begun to decline.

At the same time, the price of lithium carbonate entered a downward channel. Lithium carbonate traders took the lead in selling at a low price, and the cost pressure of lithium iron phosphate decreased, and the market price followed suit.

The unanimous judgment of the industry is that 2022 is still the year of electrification, and the production and sales of new energy vehicles will gradually recover from May. The sales of new energy vehicles in China are expected to exceed 5.8 million units. The explosion of the superimposed energy storage market, the lithium iron phosphate battery market Demand remains strong.

Since the pricing of lithium iron phosphate is mainly affected by the cost addition of iron phosphate and lithium carbonate, with the release of new production capacity of iron phosphate and the decline in the price of the upstream raw material monoammonium phosphate, the superimposed price of lithium carbonate is loosened, and lithium iron phosphate materials are expected to fall further.

However, the market supply of lithium carbonate is still tight, and the price remains high. At the end of this year, the lithium iron phosphate material is still expected to remain at the level of 100,000-130,000 RMB/ton despite overcapacity. If you want to know about LiFePO4 battery industry related information, please refer to Top 10 lithium ion battery manufacturers in China.