Iron phosphate and lithium iron phosphate (LFP) are vital raw materials for new energy vehicle (NEV) and energy storage batteries; their prices have been climbing steadily this year, and market interest remains high. Fluctuations in the volume and price of these fine phosphorus-based chemical products impact the entire industry supply chain.
**LFP Prices Double**
CCTV Finance reporters learned that LFP is a key material for NEV batteries; a single batch of approximately 400 kilograms now costs over 25,000 yuan. Just a year ago, the price was only 10,000 yuan-meaning the price has more than doubled in that time.
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Despite the price surge, demand remains robust. At an LFP production plant in Mabian Yi Autonomous County, Sichuan Province, the finished goods warehouse is packed-with products stacked high on new shelving and covering the floor. Forklifts are constantly moving in and out; due to a surge of urgent requests from downstream clients, product delivery times have been shortened from 10 days to seven.
A sales executive noted that order volumes have risen by over 30% year-on-year and are increasing monthly, peaking at around 4,300 tons in May. Over 2,700 tons were delivered in June, with a projected total of 4,500 tons for the month.
▪ **Downstream Demand Continues to Rise**
More than 90% of the LFP produced by this company is supplied to leading NEV manufacturers, which has been the primary driver of their order growth this year. Additionally, orders from small and medium-sized battery cell manufacturers have also seen some growth. A production manager told CCTV Finance that strong exports of NEVs and energy storage products are fueling the rising demand for LFP, serving as a key factor behind the current price hikes.
▪ **Rising Upstream Raw Material Costs**
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Rising upstream raw material costs are another critical factor in the current LFP price surge. LFP is primarily produced by combining iron phosphate, lithium carbonate, and glucose, with iron phosphate accounting for about 30% of the total raw material cost. The price of iron phosphate has risen sharply this year, driving up the overall production cost of LFP. Wan Hongsheng, Deputy General Manager of Sichuan Shuneng Minerals Co., Ltd., noted that the price of iron phosphate has risen by more than 50%; it stood at around 10,000 yuan per ton in early 2026 and is now approximately 15,000 yuan per ton.
**Phosphate Rock Prices Remain High;**
**Companies Proactively Expand Upstream**
Iron phosphate production relies on phosphate rock. With iron phosphate prices rising, what is the production and sales situation for upstream phosphate rock?
my country possesses abundant phosphate rock reserves. Mabian Yi Autonomous County in Sichuan is a major zone within the phosphorus-bearing belt of southwest Sichuan, characterized by large-scale operations, a concentration of industrial-grade deposits, and significant reserves.
Reporters learned that while domestic phosphate rock prices have remained in a high range since 2021, the overall trend this year has been stable. Although the price of industrial-grade phosphate rock-used to produce lithium iron phosphate (LFP)-saw a slight uptick this year, the overall increase was relatively limited; it was not the primary driver behind the recent price hikes in phosphorus-based chemical products.
Despite the relatively stable prices of upstream phosphate rock, the explosive growth of the downstream LFP market has made companies along the supply chain realize the importance of integrated operations. Consequently, they are accelerating their expansion into the upstream mineral sector and proactively securing phosphate rock resources.
**Sharp Rise in Sulfur Prices**
**Drives Up LFP Prices**
While LFP prices have surged, upstream phosphate rock prices have remained relatively stable. How have prices fluctuated for sulfur, another key raw material?
Wan Hongsheng of Sichuan Shuneng Minerals explained that the price increase for phosphate rock was minimal; the major factor was sulfur-a raw material for phosphoric acid production-which saw a significant price hike, thereby heavily impacting iron phosphate costs.
**Surging Sulfur Prices Drive Up Production Costs for Wet-Process Phosphoric Acid**
Since the beginning of the year, geopolitical tensions in the Middle East have tightened the global sulfur supply and caused prices to skyrocket. This has directly driven up production costs for wet-process phosphoric acid, leading to simultaneous price increases for downstream products such as iron phosphate and LFP.
Wu Jinkai, Chief Analyst of the Metals and Materials Group at Sinolink Securities, noted that the Middle East Gulf region accounts for a significant share of global sulfur trade. Recent disruptions in the Strait of Hormuz have blocked not only oil and gas supplies but also the supply of sulfur. The price of sulfur surged by 167%, rising from 3,783 yuan per tonne on February 24 to approximately 10,114 yuan per tonne by June 12.
**Shift to Thermal Processing Drives Up Demand for Yellow Phosphorus**
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Rising sulfur prices have driven up the cost of producing wet-process phosphoric acid. Consequently, some enterprises have shifted toward the thermal processing route-where phosphate rock is processed via electrolysis into yellow phosphorus, which is then converted into thermal-process phosphoric acid. This shift has significantly boosted the demand for yellow phosphorus this year.
Wu Jinkai, Chief Analyst of the Metals and Materials Group at Sinolink Securities, noted that the price gap between wet-process and thermal-process phosphoric acid has widened from 300 yuan per tonne to 1,200 yuan per tonne. The operating rate for yellow phosphorus production has climbed from 47.46% to 69.5%, while weekly output has risen from 14,000 tonnes at the start of the year to the current 22,000 tonnes.
**Robust Production and Sales of Yellow Phosphorus; Overall Industry Profitability Improves**
Rising market demand for thermal-process phosphoric acid has fueled robust production and sales of yellow phosphorus. Despite increased production costs, the industry's overall profitability has improved significantly.
Xu Junfeng, Deputy General Manager of Fuhua Tongda Chemical Co., Ltd., stated that the sales price of yellow phosphorus has risen from approximately 23,000 yuan per tonne at the beginning of the year to over 30,000 yuan per tonne, while production costs have increased by about 10%. Xu noted that although production costs have risen, the increase in sales prices means that yellow phosphorus enterprises currently enjoy substantial profit margins.
