[SMM Analysis] December LFP Market Summary + Outlook for Next Year's LFP Market

Published: Dec 29, 2024 22:21

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[SMM Analysis: Summary of LFP Market in December + Outlook for Next Year's LFP Market] Due to the better-than-expected demand in the September-October peak season and year-end off-season, the total LFP production in China in H2 2024 is expected to exceed that of H1 by approximately 70%. The market generally holds an optimistic outlook for next year's demand, but whether material manufacturers can make progress in price negotiations and end the two-year-long loss-making situation remains to be seen. LFP production in December saw a slight decrease compared to November, but the supply-demand gap remains significant, inventory levels are still high, and the industry's operating rate exceeds 50%. LFP prices in December remained relatively stable.

【SMM Analysis: December LFP Market Summary + Outlook for Next Year's LFP Market】Due to the September-October peak season and better-than-expected demand in the off-season at year-end, China's total LFP production in H2 2024 is expected to exceed that of H1 by approximately 70%. The market holds a generally optimistic outlook for next year's demand, but whether material manufacturers can make progress in price negotiations and end the two-year-long loss-making situation remains to be seen. LFP production in December saw a slight decline compared to November, but the supply-demand gap remains significant, inventory levels are still high, and the industry's operating rate exceeds 50%. LFP prices in December were relatively stable. Recent survey results indicate that cathode material manufacturers have a strong demand for price increases next year, with a general expectation of a rise of about 3,000 yuan/mt. In contrast, battery manufacturers are relatively more likely to accept an increase of 1,500 yuan/mt, which is half of the proposed price hike. Preliminary analysis suggests that lithium carbonate manufacturers may reduce or cancel long-term contract discounts next year, while the price of iron phosphate raw materials is also trending upward. Phosphorus chemical manufacturers are standing firm on quotes, leading to the conclusion that price increases for LFP cathode materials will become a trend, with the key being the final extent of the price hike. From a detailed perspective, products with powder compaction of 2.45 and 2.5 dominate the market, and their characteristics of homogeneity and low technical barriers make it difficult to reverse the loss-making situation. However, high powder compaction products (3.5th generation and above) occupy a relatively small market share. Coupled with higher technical barriers and energy density, demand for these products is expected to remain strong. Cathode material manufacturers capable of producing high powder compaction products are likely to gain pricing power and achieve profitability starting in H2 next year. On the supply and demand side, the LFP market is expected to grow steadily upward next year. However, due to the Chinese New Year break in Q1 and relatively sufficient year-end inventory preparation in 2024, LFP production growth and demand in H1 2025 are expected to be relatively weak, while H2 is likely to fluctuate upward. SMM New Energy Research Team Cong Wang 021-51666838 Rui Ma 021-51595780 Ying Xu 021-51666707 Disheng Feng 021-51666714 Yujun Liu 021-20707895 Yanlin Lü 021-20707875

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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