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

[SMM Analysis] On February 9, 2025, the National Development and Reform Commission (NDRC) and the National Energy Administration jointly issued the "Notice on Deepening the Market-oriented Reform of New Energy Feed-in Tariffs to Promote High-quality Development of New Energy" (NDRC Price [2025] No. 136, hereinafter referred to as "Circular No. 136"). The notice clearly stipulates the cancellation of the mandatory energy storage policy for new energy projects, marking the exit of the administrative energy storage mechanism, which has been in place for nearly eight years, from the historical stage. This policy aims to address industry pain points such as inefficient resource allocation, sharp increase in cost pressures for new energy enterprises, and the phenomenon of energy storage being "built but not used," and to promote the transition of energy storage from "policy-driven" to "economy-driven."

[SMM Analysis] According to the latest weekly data released by the China Passenger Car Association (CPCA), the average daily retail sales of passenger vehicles in China during the third week of March 2025 (March 17-23) reached ​55,000 units, representing a ​year-on-year (YoY) increase of 8%​ and a ​month-on-month (MoM) growth of 11%​.

[SMM Analysis] On March 21, the bid results for the 6GWh energy storage cell framework procurement by China Energy Engineering Group Energy Storage Technology (Wuhan) Co., Ltd. were announced. Eight companies, including EVE Energy, REPT BATTERO, Sunwoda Power, CALB, CHUNENG New Energy, Ganfeng Lithium, Envision Energy, and Desay Battery, were selected.

【SMM Analysis】Saudi Arabia has recently launched a significant energy project, initiating the prequalification process for an 8GWh battery energy storage project. This is the country's first battery energy storage system (BESS) project under the public-private partnership (PPP) model. This initiative is part of Saudi Arabia's energy transition plan, aiming to achieve 48GWh of energy storage capacity by 2030 to support its goal of having 50% renewable energy in its power mix and ultimately reaching net-zero carbon emissions by 2060.

Recently, an SMM survey revealed the following about the iron phosphate market: (1) Due to strong downstream demand, iron phosphate companies have experienced delays in order deliveries, with some orders not being fulfilled on time, leading to prices remaining firm or slightly increasing. Meanwhile, some LFP companies have expanded their capacity, seeking outsourcing and other methods, which have driven up the operating rates of some small and medium-sized LFP companies. (2) During the October negotiation season in the fourth quarter, iron phosphate companies generally hold an optimistic view of the market and maintain a bullish stance; however, LFP companies tend to adopt a wait-and-see approach, expecting the market to remain stable.

【SMM Analysis】Recently, Sungrow and Spearmint Energy announced the signing of a cooperation agreement for a battery energy storage system (BESS) exceeding 1GWh. According to the agreement, Sungrow will provide its advanced PowerTitan 2.0 energy storage solution for Spearmint Energy's energy storage project in Texas, with the deployment phase expected to extend through 2025.

According to the media, the existing capacity, after taking in all the disclosed production expansion projects, has reached 5 million mt, an obvious surpass over the downstream demand by 2025.

Domestic output of LFP stood at 410,000 mt in 2021, up 179% year-on-year, according to SMM statistics.

The prices of LFP for motive batteries rose by around 2,000 yuan/mt or 4% from the 5,000 yuan/mt in early July to 5,200 yuan/mt as of the end of July.

SMM copper cathode inventories across major regions in China fell by 2,100 mt from last Friday to 156,300 mt as of Monday July 26.