SMM, October 7 - During the China's National Day holiday, the iron phosphate and LFP markets operated steadily overall, with high production enthusiasm across the industry chain and end-use demand remaining robust. As most enterprises had completed quotations and order signings before the holiday, new orders and spot transactions during the holiday were relatively limited, with market activity mainly reflecting the continued execution of earlier orders and normal production schedules at enterprises.
FP: Order Activity Front-Loaded, Price Gains Moderate
In the iron phosphate market, most producers completed their quotations and order negotiations before the holiday. As a result, relatively few new orders were signed during the holiday period.
Production incentives among iron phosphate producers remained strong. Profitability in the segment is currently favorable, while downstream demand and order books remain healthy. These factors are encouraging producers to maintain high operating rates.
Prices for new orders were higher than in September, but the increase was limited. Some producers kept their prices broadly unchanged from the previous month. This suggests that the upward momentum in iron phosphate prices is beginning to moderate and that further price increases are becoming more difficult to implement.
However, slower price growth does not necessarily indicate an imminent price decline. Some producers continue to show a strong willingness to raise prices, while relatively tight supply and firm downstream demand are still providing support. Iron phosphate prices are therefore expected to remain resilient in the near term, although future increases may be more gradual.
Downstream purchasing activity remained strong during the holiday period. Downstream orders are still relatively robust, while supply remains tight. To ensure production continuity, buyers are also increasing inventories and building additional safety stock. Overall, the iron phosphate market continues to show a relatively tight supply-demand balance, although upward price momentum is gradually easing.
LFP: Normal Production Maintained, Order Saturation Still High
On the LFP front, enterprises overall maintained normal production during the National Day holiday, with no widespread production cuts or significant load reductions.
On one hand, downstream battery cell manufacturers' inventory levels are relatively low, creating a need to increase cathode material stockpiling to secure subsequent production and delivery. On the other hand, LFP enterprises' own inventories are also at relatively low levels, requiring active production to replenish safety stocks. Driven by both downstream demand and inventory management, LFP plants overall maintained high production enthusiasm.
Currently, LFP prices are basically flat compared with September, with no notable changes in market prices. However, some cathode material enterprises are operating at a loss, and the extent of losses may still widen slightly. The main reason is that iron phosphate prices have continued to edge up, while the settlement prices between LFP cathode plants and downstream battery cell manufacturers are typically linked to phosphoric acid prices, which are still in a slow decline. Under the dual pressure of rising raw material costs and settlement price constraints, cathode enterprises' profit margins are being further squeezed.
Despite profit pressure, downstream demand remains robust, and cathode plants generally have full order schedules, with some enterprises' orders already exceeding existing capacity. Except for enterprises affected by iron phosphate undersupply, equipment maintenance, or other external factors that may experience phased production slowdowns, most LFP enterprises will maintain normal production pace.
Market Outlook
Overall, during the National Day holiday, the iron phosphate and LFP markets operated stably, with supply-demand fundamentals remaining relatively strong. The iron phosphate market showed clear front-loaded order characteristics, with high production enthusiasm among enterprises. Tight supply and downstream stockpiling demand provided support for prices, but the extent of price increases has narrowed compared with earlier periods, and further price hikes will become increasingly difficult.
The LFP market was characterized by normal production, low inventories, and saturated orders. In the short term, supported by robust demand from downstream battery cell manufacturers and restocking needs, enterprises' production schedules remain secure, and prices are expected to remain stable. However, changes between raw material prices and product settlement prices may keep profits at some cathode enterprises under pressure.
Going forward, the market needs to focus on the release of new iron phosphate capacity, raw material price changes, downstream battery cell manufacturers' restocking pace, and cathode material enterprises' profitability changes. In the short term, market demand still provides support, and the foundation for a significant price pullback is not yet sufficient. However, the trend of slowing iron phosphate price increases and narrowing LFP enterprise profits may become more evident.
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