Home / Metal News / 2021 LFP Market Review and Forecast

2021 LFP Market Review and Forecast

iconJan 17, 2022 13:44
Source:SMM
Domestic output of LFP stood at 410,000 mt in 2021, up 179% year-on-year, according to SMM statistics.

SHANGHAI, Jan 17 (SMM) - Domestic output of LFP stood at 410,000 mt in 2021, up 179% year-on-year, according to SMM statistics. Among them, there were 5 enterprises whose LFP output exceeded 30,000 mt, namely Defang Nano, Hunan Yuneng, Changzhou Liyuan (BTR), Hubei Wanrun and Gotion Hi-Tech, with a total output of lithium iron phosphate of 258,700 mt, accounting for 63% of the entire industry, down from 68.2% in 2020. The decline in industry concentrate rate is mainly because the explosive growth of terminal sector has boosted the demand for LFP, hence in addition to leading manufacturers, many small and medium-sized manufacturers have also concentrated on production expansion, diluting the shares of some large manufacturers to a certain extent. Domestic output of LFP will total 698,000 mt in 2022, up 70% year-on-year, according to SMM estimate.

2021 LFP (power battery) market review

Q1: The drastically rising terminal demand has sharply increased the demand for lithium iron phosphate and upstream raw materials. Lithium salt and iron phosphate both suffered structural shortages, and the prices rose rapidly, resulting in the increase in the manufacturing costs of lithium iron phosphate, which pulled up the lithium iron phosphate prices on the back of rapidly growing terminal demand.

Q2: The prices of raw materials were relatively stable, and the terminal demand stabilised as well. The prices of lithium iron phosphate presented less volatility. In terms of cost, as the production and sales of lithium salt in Qinghai Salt Lake returned to normal in April, the prices were stable as a whole with occasional drops. At the same time, the terminal power battery market entered the stationary period, when the prices of lithium iron phosphate stood stable.

Q3: The raw materials were in short supply, the restocking demand was getting stronger. The demand side grew rapidly, driving up the prices. On the raw material side, the prices of  phosphorus sources have been inflated as the market over-reacted to the dual control policy of energy consumption. The lithium salt traders were also hoarding and reluctant to sell. As such, the manufacturing costs of lithium iron phosphate moved all the way up. As most LFP manufacturers signed the orders on a monthly basis, the market reacts slowly to price changes. As such, the prices only started to rise rapidly in the middle and end of the quarter.

Q4: LFP prices surged amid steeply growing demand and rising raw materials supply pressures when the capacity expanded. The LFP supply was inconsistent in Q3 amid the dual control over energy consumption. And the terminal sector generated more demand for LFP as an alternative to NMC and LMO. Hence, the supply of LFP was unable to meet the demand though the manufacturers actively expanded their capacity. In addition, the demand for upstream lithium salt rose drastically amid rising NMC and LFP output. The market fears over lithium salt supply shortage also gave birth to pressing needs to restock, further intensifying the supply side. Therefore, the LFP prices rose quickly driven by surging lithium salt prices.

LFP
price review

For queries, please contact Michael Jiang at michaeljiang@smm.cn

For more information on how to access our research reports, please email service.en@smm.cn

Related news

SMM Events & Webinars

All