Global Demand for LFP Likely to Reach 2 million mt by 2025

SHANGHAI, Dec 10 (SMM) - The prices of SMM lithium iron phosphate (power battery) stood at 92,000 yuan/mt as of today, and the average price was 1,000 yuan/mt higher than yesterday. The prices of SMM lithium iron phosphate (energy storage) recorded 86,500 yuan/mt, and the average price was also 1,000 yuan/mt higher than yesterday. The prices of SMM battery grade lithium carbonate was 219,100 yuan/mt, and the average price was 3,500 yuan/mt higher than yesterday. The prices of SMM industrial grade lithium carbonate stood at 206,500 yuan/mt, and the average price was 3,000 yuan/ton higher than yesterday. The prices of SMM iron phosphate was 23,000 yuan/mt, the average price was flat from yesterday.

Since the beginning of this year, the prices of battery-grade lithium carbonate have risen sharply from an average price of 63,000 yuan/mt in January to more than 220,000 yuan/mt recently, an increase of 249%. And the prices of iron phosphate has increased from an average of 12,000 yuan/mt in January to nearly 24,000 yuan/mt, an increase of 100%. Driven by surging costs, the prices of lithium iron phosphate (power battery) also rose rapidly from an average price of 39,000 yuan/mt in January to 93,000 yuan/mt recently, an increase of around 138%.

Since December, the prices of lithium iron phosphate (power battery) have recorded new highs again, mainly due to the rising costs of raw materials, coupled with the short supply of lithium iron phosphate amid the sharp rise in downstream demand. In terms of cost, the prices of industrial-grade lithium carbonate continued to rise. While in terms of supply, Qinghai was restricted by the use of natural gas in November, and the output dropped accordingly. Some of the production lines were in a state of suspension, and the output decreased by 22% month-on-month. In addition, major domestic lithium carbonate manufacturers will conduct maintenance in December in light of Chinese Spring Festival, and it is expected that the overall lithium carbonate output in December will decrease by 7% from the previous month. On the demand side, the demand for lithium iron phosphate continues to rise, with a month-on-month increase of 14% in November. In December, with the release of new production capacity of lithium iron phosphate enterprises on the combination of high demand, the demand is likely to increase by more than 7% month-on-month. With approaching the end of the year, there has been demand for restocking lithium manganate and the output rose slightly from the previous month. The costs of iron phosphate have changed little recently, and the overall prices are relatively stable.

In terms of demand for lithium iron phosphate, the proportion of LFP battery installed capacity has continued to increase, and has exceeded that of ternary cathode battery since July. It has continued to maintain a proportion of about 55%-60% . From the perspective of the terminal market, the cost-effective advantages of LFP battery, such as improved technology, increased energy density, better safety, and lower costs of LFP battery, have increased its market shares in all segments. In addition, as the prices of raw materials have risen sharply this year, the costs of battery cells carries great upside potential. Compared with ternary batteries, LFP batteries are more cost-effective, resulting in an increase in the proportion of LFP demand in power battery market, E-bike battery market and other sectors.

In terms of the power battery market, more and more models are equipped with LFP batteries this year, such as BYD’s new electric vehicles, Great Wall Euler series, Wuling Hongguang MINI, Xiaopeng G3 and P7, Leap Motor T03, Roewe eRX5 and Roewe ei6, and Chery eQ1. BYD’s overall sales performance of electric vehicles this year has been outstanding. In recent months, its monthly production and sales have increased by 10,000 units. Most of its models are equipped with LFP batteries, and the demand for LFP batteries has increased significantly.

Judging from market news, the CATL (Tesla’s supplier of LFP battery) will have a substantial increase in LFP orders next year. It is expected that the proportion of CATL LFP batteries will reach 70% or more next year.

Domestic battery companies have been extending their businesses to the LFP battery sector, such as CATL, BYD, Guoxuan High-tech, EVE Energy, Ruipu Energy, as well as traditional ternary battery companies like SVOLT Energy, Farasis Energy, Sunwoda Electronic. In addition, overseas battery companies such as LG Chem and SKI also began to deploy in the LFP batteries market this year. In addition, ternary materials companies, ternary precursor companies, phosphorous chemical companies, titanium dioxide companies and other companies in different fields have all entered the lithium iron phosphate market. Hence lithium iron phosphate has become a hot market in the new energy industry in 2021.

In the long run, lithium iron phosphate batteries may occupy a relatively dominant position in the domestic market due to their cost-effective advantages, and the proportion of lithium iron batteries will gradually increase in overseas markets as well. It is estimated that the global demand for LFP batteries will reach 600GWh in 2025, and the demand for lithium iron phosphate materials will approach 2 million mt.