Core Insight: After a three-year price "collapse" and industry-wide losses, the lithium iron phosphate (LFP) cathode material market is at a critical turning point. Recently, leading company Anda Technology announced an increase of 3,000 yuan per ton in processing fees for its full product series, effective January 1, 2026. This is not an isolated case, as another top player had already taken the lead in raising prices in November. Concurrently, battery giants like CATL and BYD have been issuing million-ton-level long-term agreements to secure high-end production capacity for the coming years. This dual dynamic of "price hikes" and "capacity locking" signals that the industry's core driving logic is profoundly shifting from brutal "low-price competition" to technology-led "value competition".
The backdrop of this price adjustment wave is an unbearable burden on the industry. Public data shows that from late 2022 to August 2025, the price of LFP materials plummeted from a high of 173,000 yuan per ton to 34,000 yuan, a staggering drop of 80.2%. This 36-month downward cycle resulted in widespread losses across the sector. Industry statistics indicate that, except for Hunan Yuneng which remained marginally profitable, several leading listed companies including Shenzhen Dynanonic and Ronbay New Energy have accumulated over 10 billion yuan in net losses over the past three years. The severe phenomenon of "increased production without increased revenue" has become a core bottleneck restricting high-quality industrial development.
The industry's plight has drawn significant attention from associations. The China Industrial Association of Power Sources recently issued an initiative calling for rebuilding market pricing logic based on a cost index, specifying the industry's average cost range for the first three quarters of 2025 and urging companies not to engage in low-price dumping below the cost baseline. This action aims to curb "cutthroat" malicious competition and create conditions for reasonable profit recovery in the industry.
In stark contrast to the difficulties faced by upstream material producers is the explosive growth of the downstream power and energy storage markets. From January to October 2025, LFP batteries accounted for over 81% of total power battery installations, demonstrating absolute dominance. In the energy storage sector, their share is close to 100%. Robust demand has driven continuous capacity ramp-ups at leading battery companies, making the stability of core material supply more critical than ever.
However, the market suffers from a severe "structural contradiction": low-end capacity is excessive, while high-end capacity meeting performance requirements like fast charging and long cycle life remains in short supply. Particularly, fourth-generation high-tap-density LFP products (with a powder compaction density above 2.6g/cm³), which significantly enhance battery energy density, have become the focal point of market competition. Currently, only a few leading material companies can achieve mass production of such products.
Anticipating this shortage of high-end capacity, battery giants are opting to "lock in" supply with long-term agreements. This year, CATL has successively signed 5 to 6-year procurement agreements with companies like Ronbay New Energy and Hunan Yuneng, totaling millions of tons. Its 1.32-million-ton agreement with Ronbay New Energy alone is estimated to be worth over 40 billion yuan. Companies like BYD, Chu Neng New Energy, and Eve Energy have also followed suit, securing long-term partnerships with material suppliers. These large orders not only ensure supply chain security for battery makers but also provide material companies with stable orders and the confidence to expand production through the cycle.
The resonance of industry-wide price increases and long-term agreements clearly charts the industry's future course: moving away from homogenized price wars towards value competition centered on technological innovation.
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Technology Premium Becomes Reality: High-tap-density LFP products already command a clear premium of 2,000 to 3,000 yuan per ton compared to standard products. This means companies leading technological upgrades will be the first to recover profitability. Leading firms are now focusing resources on R&D for next-generation technologies like lithium manganese iron phosphate and ultra-long cycle life products.
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Accelerating Industry Consolidation: Long-term agreements are highly concentrated among leading material companies with technological advantages, while small and medium-sized manufacturers lacking technology and capital, as well as some cross-border players, face being phased out. Market share will further concentrate towards the top, leading to a more stable industry landscape.
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Deepening Industry Chain Collaboration: The cooperation between battery giants and material companies has evolved beyond simple buyer-seller relationships to joint R&D and technological iteration. For example, CATL and Ronbay New Energy agreed to jointly promote the mass production and adoption of high-tap-density products. This "strong alliance" model will accelerate technological progress across the entire lithium battery industry.
Conclusion: The industry-wide price hike of 3,000 yuan is a necessary self-correction for a sector that has been bleeding continuously. The million-ton-level long-term agreements represent the market's advanced vote of confidence in the value of high-end technology. Together, they declare that the old era for the LFP industry—relying on low-cost expansion and price wars for market share—is coming to an end. A new era, where competitive advantage is built on technological barriers, product performance, and stable supply capabilities, has already begun. For companies, the key to future success will no longer be production scale, but the ability to continuously lead technological iteration.