China’s lithium iron phosphate output rises in Aug as demand improves

【SMM Analysis】Clearway Energy Group has signed an exclusive offtake agreement with a California utility company, involving a 3GWh battery energy storage system (BESS). This agreement was signed against the backdrop of delays in energy storage installations and grid connections in the US, aiming to ensure smooth sales channels for the project's electricity.

【SMM Analysis】Hecate Energy faced rejection for a 2.4 GWh project in California, while San Diego voted against a ban on battery energy storage systems (BESS). According to search results, Escondido became the first city in San Diego County to prohibit battery energy storage sites until new land use policies and standards related to BESS are established. The city council unanimously voted on October 9 to impose a temporary restriction, initially set for 45 days, which could be extended by 10 months and 15 days, and further extended by 12 months.

【SMM Analysis】Following the three severe fires at energy storage facilities in New York State in 2023, Governor Kathy Hochul announced an update to the "New York Fire Code" to enhance the safety of energy storage projects. The newly revised regulations specifically target lithium-ion battery energy storage systems, requiring projects with a capacity exceeding 600 kWh to comply with stricter safety standards.

【SMM Analysis】According to the latest research report released by the Natural Resources Defense Council (NRDC), Illinois plans to utilize the sites of soon-to-be-decommissioned power plants to deploy a battery energy storage system with a capacity of up to 3GW. This initiative will not only meet the state's electricity supply needs but also reduce reliance on the construction of new transmission lines.

According to SMM statistics, from January to June 2024, the total production of LFP reached 861,530 mt, a significant YoY increase of 60%. Overall, after the traditional market off-season in January and February, LFP production saw a notable recovery in March and April, peaked in May, and began to decline in June due to downstream inventory reduction.

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.

Various factories have successively introduced plans for long-life energy storage batteries plan according to national policies and market requirements: the cycle life of LFP energy storage cells represented by 280Ah can reach 6000-10000 times with the iterative update of technology, while ensuring ultra-high energy efficiency.

The raw material prices, such as lithium carbonate, lithium hexafluorophosphate, solvents, and PVDF, have increased further since Q3. Prices of battery-grade and industrial-grade lithium carbonate rose 49% and 52% respectively MoM in September. LFP prices increased 23%, ternary cathode material prices gained 12% and electrolyte rose 15-18%. Ternary cathode material battery cell costs increased 8.3% in September and LFP battery cell rose 7.2% on the back of rising battery material prices. 

The signing ceremony for the LFP project between Ningxiang High-tech Zone and Hunan Blossom Group was held on August 30. The investment of the project is 12 billion yuan, including 3 billion yuan for fixed assets. Also, the project involves an annual capacity of 200,000 mt LFP and 40 production lines.

The proportion of LFP batteries installed in NEVs has increased from 38% in January to 51% in July. The installed capacity of LFP battery is expected to continue to grow in H2.