As 2025 draws to a close, the lithium iron phosphate (LFP) industry is witnessing a crucial turning point. Multiple enterprises have initiated price negotiation with customers, planning to increase prices by 2,000 to 3,000 yuan per ton. This move is not accidental but an inevitable result of the continuous improvement in supply-demand relations after the industry experienced two and a half years of adjustment. Looking back at the market trend, after LFP prices peaked at 158,000 yuan/ton for energy storage grade and 173,000 yuan/ton for power grade in November 2022, they embarked on a more than two-year downward trend due to oversupply caused by aggressive capacity expansion in the industry. By late June this year, the prices had dropped to a low of 30,500 yuan/ton and 31,600 yuan/ton, a decline of over 80%. A turning point emerged in the second half of the year, with prices of both products gradually recovering. Currently, they have risen to 38,600 yuan/ton and 40,100 yuan/ton respectively, with an increase of over 26% for both. The confidence to raise prices stems from the significant improvement in the industry's fundamentals. Since 2023, enterprises have successively slowed down their capacity expansion pace, with leading enterprises' capital expenditures shrinking sharply, even halving in 2024. Meanwhile, the demand for power batteries and energy storage batteries has surged continuously, driving the industry's effective capacity utilization rate to recover steadily from 55% in 2024, exceeding 70% in July and reaching around 75% recently, indicating a marked optimization of the supply-demand pattern. Notably, the new round of capacity expansion will focus on technological upgrading. As power batteries have higher requirements for fast charging and high energy density, high-tech threshold products such as high compaction density have become the core direction of capacity expansion. Leading enterprises are concentrating resources to deploy in this field, while small and medium-sized enterprises with weak technical capabilities may face the risk of elimination, and the industry concentration is expected to further increase. This price hike not only marks the LFP industry's recovery from the downturn but also indicates that the industry will enter a new stage of high-quality development driven by technology. Leading enterprises are expected to occupy a larger market share with their technological advantages.
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