Lithium iron phosphate (LFP) serves as the mainstream cathode material for lithium-ion batteries. Since the beginning of this year, driven by growing demand in end-use sectors-such as energy storage and new energy vehicles-LFP batteries have gained significant market favor due to their superior performance and cost-effectiveness. Consequently, battery manufacturers have ramped up their procurement of LFP raw materials to ensure uninterrupted battery production.
**Rising Demand in the Energy Storage Sector**
**Battery Manufacturers Boost Procurement of LFP Raw Materials**
Inside a production workshop at a battery manufacturing facility in Mianyang, Sichuan Province, an intelligent automated production line churns out 150 lithium iron phosphate batteries every minute. A company executive told reporters that, driven by a surge in orders from end-use markets since the start of the year, their procurement volume of LFP raw materials has more than tripled year-on-year.
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**Chen Guoxin, Vice President, Sichuan Mianyang Chuangming Intelligent Battery Co., Ltd.:** "Since lithium iron phosphate acts as the cathode material, it typically accounts for 40% to 60% of a battery's total cost. Currently, our battery order volume has surged by over 120% year-on-year; we are now producing 150,000 batteries daily, and our order backlog extends all the way to 2027."
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On-site reporting revealed that the LFP batteries produced at this facility are primarily utilized across a diverse range of fields, including new energy vehicles, electric two-wheelers, power grid energy storage, and embodied intelligence robots. Among these applications, the energy storage sector has witnessed the most rapid growth in demand this year-a trend driven particularly by a sharp increase in export orders.
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**Chen Guoxin, Vice President, Sichuan Mianyang Chuangming Intelligent Battery Co., Ltd.:** "Last year, energy storage batteries accounted for approximately 30% of our total shipments. This year, however, the combined share of residential energy storage and base station energy storage solutions has risen to around 60%. Furthermore, our orders have now expanded to encompass more than 20 different countries."
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At the production workshop of another major energy storage battery manufacturer, LFP battery cells of various specifications are seen moving along the assembly line, undergoing processing and shaping. A site manager noted that LFP battery cells are characterized by their high safety standards, long cycle life, and low production costs. Since the beginning of the year, the factory has been operating at full capacity, with its total order volume tripling compared to the previous year.
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According to statistics compiled by the Zhongguancun Energy Storage Industry Technology Alliance, the volume of new overseas orders secured by Chinese energy storage enterprises is projected to reach 366 GWh in 2025-representing a year-on-year growth rate of 144%. Industry insiders indicate that as 2026 approaches, global demand within the energy storage market continues to surge. As the dominant cathode material currently utilized in the energy storage sector, lithium iron phosphate (LFP) possesses substantial potential for market growth.
**LFP Production and Sales Both Boom**
**Some Factories See Orders Booked Through Year-End**
Currently, lithium iron phosphate accounts for approximately 80% of shipment volume within China's domestic market for lithium-ion battery cathode materials. Driven by an explosive surge in demand from downstream battery manufacturers, upstream LFP producers are witnessing a massive increase in their order volumes.
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Inside a lithium-ion battery industrial park in Suining City, Sichuan Province, an automated production workshop for lithium iron phosphate is operating at full capacity. After undergoing processes such as raw material blending, grinding and pulverizing, and kiln sintering, the finished LFP product is sealed, packaged by workers, and transported to the finished goods warehouse. A company executive stated that since June of last year, they have observed a distinct market recovery, with order volumes demonstrating a steady month-over-month upward trend.
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**Tang Kehai, Production Director at Sichuan Langsheng New Materials Technology Co., Ltd. (Sheng屯 Group):** "Since the beginning of this year, we have been operating at full capacity-running at full throttle-achieving a state of maximum production and sales. Our daily output has risen from 300 tons last year to 400 tons this year. Furthermore, production of our high-performance LFP products has increased by 30% compared to last year, while orders for energy-storage-grade LFP have surged by over 50%."
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Meanwhile, in the finished goods warehouse of another production facility within the same industrial park, sacks of lithium iron phosphate-each weighing approximately 400 kilograms-are being dispatched to destinations across the country. An on-site supervisor informed reporters that their current inventory levels are at a historic low.
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During their interviews, reporters learned that since June of last year, the price of lithium iron phosphate has been on a continuous upward trajectory, driven jointly by rising production costs and surging market demand. Over the past year, the market price for mainstream lithium iron phosphate products has risen from approximately 30,000 yuan per ton to its current level of around 60,000 yuan per ton-marking an increase of nearly 100%. Lithium Iron Phosphate Manufacturers Ramp Up R&D Efforts
High-End Products Become Primary Focus for Production Expansion
During recent site visits, reporters observed that as downstream battery manufacturers impose increasingly stringent requirements regarding driving range and service life, the lithium iron phosphate (LFP) industry is shifting its focus from a past "battle of production capacity" to a present-day "competition of value." Consequently, strategic positioning in the high-end market has emerged as a key strategy for many enterprises seeking to capture market share.
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Inside the R&D center of a lithium iron phosphate manufacturer, new products featuring various formulations and processing techniques are currently undergoing trial production on the pilot line. On-site staff informed the reporters that, since the beginning of this year, the company has been continuously intensifying its R&D efforts focused on high-end lithium iron phosphate materials.
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It is understood that "high-compaction" lithium iron phosphate represents an upgraded category of the material. By increasing the material's compaction density-thereby allowing for the packing of a greater amount of active material within a fixed cell volume-it effectively boosts the battery's energy density. While retaining the inherent safety and cost advantages of traditional lithium iron phosphate, this advanced variant is better suited to meet the high-end requirements of both energy storage systems and power batteries. Currently, numerous companies are strategically expanding their production capacities within the high-end segment, with high-compaction lithium iron phosphate serving as a representative flagship product.
According to incomplete statistics, the lithium iron phosphate industry has witnessed a surge in production expansion this year, with numerous listed companies announcing expansion plans in rapid succession. Industry experts suggest that the sector is likely entering a new phase of development, one centered on technological innovation and cost control.
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Zhang Hang, Senior Analyst at the Guotai Junan Futures Research Institute, stated: "This year, the lithium iron phosphate market is expected to continue its trajectory of overall volume expansion coupled with structural optimization. Prices are likely to experience a moderate upward trend, bolstered by support from both demand and production costs. Over the next two years, the global market for new lithium iron phosphate materials is projected to see an increase in demand reaching the million-ton scale."
