SMM Analysis: China's March LFP Production Grew Less Than Expected, Demand Recovery Slows In April

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SMM, April 1

China's LFP market saw a rebound in production in March, with supply structure adjustments, and demand growth slowed in April

In March 2025, China's LFP market experienced a rebound in production amid the traditional peak season, but the overall growth rate fell short of expectations. The industry landscape continued to diverge, and adjustments were made on the supply side.

Supply side: Peak season production rebounded, with minor structural adjustments

China's LFP production in March increased by 13.4% MoM and approximately 89% YoY, with the industry operating rate rising to 57%. Despite a significant rebound in production, the growth rate still fell short of market expectations. On the supply structure front, minor adjustments were made this month. As the price of raw material iron phosphate generally showed an upward trend, top-tier LFP material manufacturers maintained a strong sentiment to stand firm on quotes. However, downstream battery cell enterprises, aiming to reduce costs and improve efficiency, shifted some orders from top-tier to mid-tier enterprises, marking a stark contrast to the supply structure in February.

Demand side: End-use demand improved, with inventory and procurement adjustments

Demand side, March saw improved end-use demand for power, with downstream battery cell manufacturers showing a noticeable increase in production. However, overall procurement volume slightly declined, leading to a reduction in LFP material inventory at battery cell manufacturers. This indicates that downstream enterprises, while experiencing demand growth, are also optimizing inventory and cost control to adapt to market changes.

April outlook: Demand growth to slow, strong expectations for processing fee increases

Downstream demand growth is expected to slow in April, with LFP production showing no significant increase. Currently, the trend of orders shifting from top-tier to mid-tier enterprises is likely to continue. Additionally, LFP material manufacturers generally hold strong expectations for processing fee increases in Q2, prompting a new round of price negotiations with downstream battery cell manufacturers. The outcome of these negotiations will have a significant impact on industry profit distribution and the supply landscape.

SMM New Energy Research Team

Cong Wang 021-51666838

Rui Ma 021-51595780

Disheng Feng 021-51666714

Zhicheng Zhou 021-51666711

Yujun Liu 021-20707895

Zihan Wang 021-51666914

Yanlin Lyu 021-20707875

Haohan Zhang 021-51666752

Jie Wang 021-51595902

Yang Xu 021-51666760

Bolin Chen 021-51666836