Changes in iron phosphate market supply from 2022 to 2023 H1

SHANGHAI, Aug 15 (SMM) –

In recent years, the supply of iron phosphate, the precursor of LFP, has been increasing, and it has been accelerating in the highly heated new energy market. In the iron phosphate industry, more enterprises are entering the industry, and there are many factories under construction, with the total number rising from 10 in 2020 to 60 in 2023, affected by the growth of downstream demand for new energy vehicles and energy storage lithium batteries. There was a significant increase in domestic production capacity of LFP from 2022 to the first half of 2023 (2023H1), which has driven the production capacity and output of LFP's precursor iron phosphate to rise simultaneously.

The integrated production pattern of precursor iron phosphate produced by LFP enterprises is accelerating, which brings significant pressure to the iron phosphate supply market. The top iron phosphate production enterprises have increased their scale, locked in customers with long-term orders and low price in advance, while small and medium-sized enterprises are seeking opportunities for feasible cooperation, mergers and acquisitions, and other breakthroughs.

In the iron phosphate industry, production enterprises are divided into old players and new entrants. Both old and new players are striving to improve product stability and make breakthroughs in high-pressure compaction performance. In order to better fulfill the requirements of downstream customers of power and energy storage, battery cell enterprises have continuously increased the compaction requirements for LFP: from less than 2.45g/cm³, 2.45-2.55g/cm³, 2.55-2.6g /cm³ to more than 2.6g /cm³. This has also led to increased requirements for the core raw material precursor iron phosphate, which plays an important role in functionality.

In terms of iron phosphate supply, comparing the changes in production capacity, output, and operating rate between 2022 and 2023 H1, it can be seen that there are several key points.

1、 The production of iron phosphate is increasing rapidly

In H1 of 2023, China's iron phosphate production was 500,000 mt, which was 2/3 of the total output in 2022, with a cumulative increase of 96% year on year. The monthly production of iron phosphate has hit a historic high for two consecutive months (May and June in 2023).

2. Rapid expansion of production capacity and operating rates at low to medium level

In terms of the operating rate of iron phosphate enterprises, the average operating rate in 2022 was 80%, while the average operating rate in 2023 was 50%. There are two reasons for the low operating rate in 2023, the first reason is that the newly invested production capacity of enterprises is in ramp-up stage; the second reason is overcapacity, and the speed of order acquisition is lower than the speed of capacity expansion, resulting in insufficient operating rates for enterprises, especially for small and medium-sized enterprises.

3. The production ranking of top enterprises (TOP15) has changed

From 2022 to 2023 H1, the integrated enterprises in Hunan, which have been leading in production capacity and output, firmly occupy the top position. The top ranked iron phosphate production enterprise is an integrated enterprise of LFP and its precursor. All the precursor iron phosphate produced is internally used for the LFP production line. The enterprises ranked second to tenth in 2022 are old players with excellent reputation in the market and stable downstream customers. Due to the stability of its product performance, they have also won the favor of many new LFP enterprises, and the iron phosphate supplied by old players is preferred in the trial production of LFP. Among the enterprises ranked between eleventh and fifth, there are two new players. As of 2023 H1, among the enterprises ranked second to tenth, there are new players entering, and they have a strong momentum to continue to move forward. In the ranking of eleventh to fifth, two new players moved in. It is expected that by the end of 2023, the production of integrated enterprises will still be strong, with top old players closely following, and top new players will continue to catch up with and surpass medium-sized old players, leaving them behind.