China's LFP production rebounded in March, but the overall growth rate fell short of expectations, with demand growth slowing in April [SMM Analysis]

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SMM reported on May 7

that in April, China's lithium iron phosphate (LFP) prices plummeted, while production slightly exceeded expectations, and demand continued to grow in May.

According to the latest data from SMM, China's LFP production reached approximately 260,000 mt, up 2% MoM and 93% YoY. It is expected to increase by around 5% MoM in May.

Price Trends

In April, LFP material prices generally showed a significant downward trend, declining by approximately 2.32% MoM from March. This was mainly influenced by the price changes of lithium carbonate, which fell by about 6,000 yuan/mt during the month, while processing fees remained stable. On the raw material side, the average price of iron phosphate showed a slight upward trend this month. Some LFP manufacturers had hoped for an increase in processing fees in Q2, but no substantive results were achieved after negotiations with downstream battery cell manufacturers. However, as of now, the price of iron phosphate raw materials has started to decline, so a certain price reduction is expected for iron phosphate in May. Additionally, with some battery cell manufacturers planning to restart tenders in June, the probability of a price increase before then is low. Considering these two factors, SMM expects that processing fees will struggle to rise in Q2.

Supply and Demand

On the supply side, a few leading manufacturers fell short of production expectations this month, partly due to structural adjustments in the industry's supply chain and partly due to power rationing, production line upgrades, or maintenance at individual material plants. However, production among second- and third-tier manufacturers remained relatively active overall.

On the demand side, the end-use demand for NEVs performed well in April, but some ESS orders were affected. This was partly due to the cancellation of mandatory energy storage allocation requirements in China and partly due to a slight decline in demand caused by increased US tariffs. Nevertheless, driven by NEV demand, downstream battery cell manufacturers still saw a slight increase in overall production schedules. Looking ahead to May, the ESS market demand is expected to continue to be impacted by US tariff policies and the cancellation of mandatory energy storage allocation in China, resulting in a slight decrease. However, the NEV market is still expected to perform well, with overall battery cell production schedules expected to maintain an increase in May, and LFP material production is also expected to rise.

According to an SMM survey, the fourth-generation LFP material technology maintained a rapid development momentum in 2025. This year, some new material manufacturers have passed tests for their fourth-generation products and begun mass deliveries to downstream battery cell manufacturers. Competition for fourth-generation materials will intensify this year. When it is difficult to negotiate higher processing fees, being able to produce fourth-generation materials and successfully introduce them into the supply systems of downstream battery cell manufacturers has become one of the ways to achieve profitability and is also one of the important tasks for most material manufacturers at present.

SMM New Energy Research Team

Cong Wang 021-51666838

Rui Ma 021-51595780

Disheng Feng 021-51666714

Zhicheng Zhou 021-51666711

Yujun Liu 021-20707895

Zihan Wang 021-51666914

Yanlin Lv 021-20707875

Haohan Zhang 021-51666752

Jie Wang 021-51595902

Yang Xu 021-51666760

Bolin Chen 021-51666836