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Spot trading for lithium iron phosphate (LFP) remains primarily need‑based, keeping prices under pressure as market participants await clearer signals from downstream sectors. As of September 16, 2024, premium‑grade power‑type LFP is quoted at 56,666 RMB/ton in China, with overall movement limited this week.
Prices initially rallied on lithium carbonate stability and peak‑season optimism but reversed sharply after demand fell short. Early‑week quotes from cathode producers rose on the back of a firming lithium carbonate market and expectations for the “Golden September” buying season. However, once downstream actual demand failed to match projections and lithium prices corrected, LFP quotes quickly slumped, erasing early gains.
Operating rates remain highly fragmented. Integrated majors — for example, Hunan Yuneng and Defang Nano — continue to run at 95%–100% capacity, achieving full off‑take with delivery lead times shortened to under seven days. In contrast, small‑to‑medium manufacturers, lacking the capability for high‑tap‑density premium grades, are operating at less than 50% capacity, with some idling lines entirely. Industry‑wide, average capacity utilization for the first half of 2024 was roughly 75%, though spot checks by CSC Financial suggest July’s average reached about 90%.
New capacity from recent plant startups lifted overall supply, and traders who had accumulated inventory at lower prices sold into the rally, adding to spot availability. This oversupply of standard‑grade material is one key factor capping any price rebound.
Battery‑grade lithium carbonate, tracked by SunSirs, dropped from 156,000 RMB/ton at the beginning of September to 143,000 RMB/ton by September 7 — an 8.3% decline — with a single‑day loss as large as 7,000 RMB/ton. Futures prices followed a similar downward trajectory, sliding from 142,000 RMB/ton on Monday to 134,800 RMB/ton by Friday, after briefly dipping toward 128,000 RMB/ton intra‑week. The cost retreat directly undercuts LFP pricing support.
On the power‑battery front, Chinese installations reached 335.6 GWh in the first half of 2024 (up 12% YoY), with LFP commanding an 81% share at 272 GWh. The growth mix is shifting from volume to quality, driven mainly by commercial vehicles and export orders. Meanwhile, the energy storage segment — long seen as the key growth engine — saw domestic lithium‑ion battery shipments total about 485 GWh in H1 2024, a more than 80% year‑on‑year increase. Yet large‑scale storage tenders in China have decelerated recently, and overseas order releases have been sluggish, limiting spot consumption.
Automotive OEMs continue to buy strictly on a need‑basis, showing limited appetite for high raw‑material costs.
While China remains the largest LFP market, US developments are reshaping the global outlook. The Inflation Reduction Act (IRA) has spurred massive investments in domestic LFP production — companies such as Our Next Energy (ONE) and American Battery Factory have announced new facilities in Michigan and Arizona, targeting total LFP cell capacity exceeding 100 GWh by 2026. However, eligibility for IRA tax credits requires meeting strict domestic content rules, which has created a “China+1” sourcing trend. This is gradually tilting some demand away from Chinese‑origin LFP towards Korean and Japanese cathode suppliers that can meet US requirements. As a result, Chinese LFP exporters face potential headwinds in the US market, while domestic Chinese prices remain the benchmark for global spot trading.
Analysts at CRU Group recently noted that the global LFP cathode market is likely to see a supply surplus of 150,000 tonnes by 2025, further pressuring prices, especially for standard‑grade materials.
SunSirs analysts expect LFP prices to fluctuate in the 54,000–58,000 RMB/ton range for power‑grade and 53,000–56,000 RMB/ton for storage‑grade material through late October, supported by pre‑holiday buying ahead of the Mid‑Autumn Festival and National Day. After the inventory build is complete, if energy‑storage production schedules fall short, standard second‑ and third‑generation material could see a slight additional decline.
SunSirs has been tracking commodity price data for nearly 20 years, covering over 200 commodities. For subscription inquiries, contact support@sunsirs.com.
