The lithium iron phosphate (LFP) market is currently undergoing a structural transformation. As of December 1, the spot average price for power-grade LFP has risen to 39,950 yuan per ton, while energy storage-grade products have similarly increased to 36,950 yuan per ton.

This contrasts sharply with data from August this year — when the average price for power-grade LFP was only 35,350 yuan per ton, and energy storage-grade was 32,900 yuan per ton.

More crucially, CATL recently signed three mega orders worth tens of billions, locking in over one million tons of production capacity. Meanwhile, LONGi Green Energy Technology and Chu Neng New Energy have significantly raised their total procurement volume from 2025 to 2030 from an original 150,000 tons to 1.3 million tons.

01 Price Inflection: From Sustained Decline to Collective Increases

The LFP market is reaching a critical turning point. Multiple leading companies have recently intensively signaled price adjustments. Anda Technology explicitly stated that, starting January 1, 2026, processing fees for its full range of LFP products will increase by 3,000 yuan per ton on the existing basis.

Another leading company had already initiated a price increase of a similar magnitude in November 2025.

This change breaks the industry's three-year slump. From the end of 2022 to August 2025, the price of LFP cathode materials plummeted from 173,000 yuan per ton to 34,000 yuan per ton, a drop of 80.2%.

The entire industry suffered continuous losses for over 36 months, with the average asset-liability ratio of six listed companies reaching 67.81%. Prolonged "cutthroat" competition severely compressed corporate profit margins.

02 Long-term Agreement Wave: Giants Lock Down High-End Capacity

Alongside market price adjustments, large-scale long-term agreements are reshaping the industry's supply chain landscape.

CATL signed three orders worth tens of billions within the year, including prepaying 500 million yuan to Ronbay New Energy to lock in 160,000 tons of capacity and reaching a long-term agreement with Hunan Yuneng for 1.32 million tons (value exceeding 40 billion yuan).

The supplementary procurement cooperation agreement signed between LONGi Green Energy Technology and Chu Neng New Energy significantly increased the total sales volume of LFP cathode materials from 2025 to 2030 from an originally agreed 150,000 tons to 1.3 million tons.

These long-term agreements stand in stark contrast to traditional spot transactions, reflecting downstream companies' strategic adjustments to ensure stable supply of high-end products. Order concentration is evident, intensifying the battle for high-end production capacity.

03 Industry Self-Rescue: Association Initiatives and Cost Baselines

Faced with prolonged losses, the industry has begun spontaneously seeking change. The China Industrial Association of Power Sources recently issued a coordinated action initiative, calling for rebuilding market pricing logic based on a cost index to curb "cutthroat" vicious competition.

Data disclosed by the association shows that the industry's average cost range from January to September 2025 was 15,714.8 yuan/ton to 16,439.3 yuan/ton (tax excluded), explicitly urging companies not to engage in low-price dumping below the cost baseline.

This move has received positive responses from leading companies. Hunan Yuneng stated that, based on the supply-demand tension for its products, especially the prominent contradiction for new product series, the company has achieved good results in business negotiations with customers.

04 Demand Drivers: Dual Explosion in Power and Energy Storage Markets

Strong downstream demand provides a solid foundation for industry recovery. In the first three quarters of 2025, LFP batteries accounted for 81.5% of installations in the power battery sector.

In the field of energy storage lithium batteries, LFP's share reached an astonishing 99.9%. Demand growth in the energy storage sector is particularly significant, with new energy storage installations in the first half of 2025 increasing by 160% year-on-year.

Structural changes in market demand are driving product upgrades. Demand for high-end, high-tap-density LFP products has surged, with their processing fees being 20%-30% higher than ordinary products.

05 Technological Breakthrough: From Homogenization to High-End Competition

The industry's competitive focus is undergoing a fundamental shift. Over many years, the LFP industry engaged in homogeneous low-price competition to capture market share. Blind expansion of low-end capacity led to an overall capacity utilization rate maintained at only around 50%.

Now, guided by policy and spontaneous market adjustments, the industry is transitioning from "scale competition" to "quality competition." Surging demand for high-end products like high-tap-density LFP and lithium manganese iron phosphate is forcing companies to shift their competitive focus from scale expansion to technological innovation and quality improvement.

Leading companies have gained market advantages through technological upgrades. High-tap-density products (tap density ≥ 2.6g/cm³) command a premium of 2,000-3,000 yuan/ton, while the gross profit margin for ordinary products has fallen below 5%.

06 Structural Overcapacity: High-End Shortage and Low-End Clearance

Despite overall industry pressure from overcapacity, this issue is more structural. On one hand, high-end capacity with genuine technological advantages remains in short supply; on the other hand, a large amount of low-end, technologically backward capacity is being rapidly phased out.

Data shows that in 2024, domestic LFP cathode material capacity approached 4.7 million tons, but actual output was only over 2.3 million tons, with a capacity utilization rate of about 50%. This "high-end shortage, low-end surplus" divide is accelerating industry consolidation.

As the industry standard for "High-Tap-Density Lithium Iron Phosphate Materials" enters the drafting stage, rising technical barriers will further reshape the industrial landscape. Leading companies with technological reserves and large-scale manufacturing capabilities are accelerating their overseas market layouts, while companies reliant on low-end capacity face elimination pressure.

The global new energy industry chain is at a critical juncture of technological iteration and capacity restructuring. As of early December, the price range for power-grade LFP has climbed to 38,400-41,500 yuan per ton, while energy storage-grade products have reached 35,300-38,600 yuan per ton.

With the finalization of million-ton-level long-term agreements and the advance of the industry-wide 3,000 yuan price adjustment, the competitive logic of the LFP industry is being completely rewritten. As technological barriers replace price wars at the core of competition, China's 95% market share in the global LFP industry may usher in a more stable phase of high-quality development.