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

【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.

【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.

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 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.

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

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. 

China produced 22,000 mt of lithium iron phosphate in January, up 13.1% from December. The downstream supporting models continued to sell well in January.