Analysis of Profit Protection Mechanism Under Longpan Technology's 'Volume-Locked, Price-Unlocked' Long-Term Agreement Model

Based on search information, I conducted a systematic analysis of the profit protection mechanism under Longpan Technology’s ‘volume-locked, price-unlocked’ long-term agreement model:

Longpan Technology’s recently signed long-term orders exhibit the characteristics of ‘volume-locked, price-unlocked’ [1][2]:

: Sales volume increased from the original 150,000 tons to 1.3 million tons, the agreement validity period was extended to December 31, 2030, and the expected total sales amount exceeds 45 billion yuan [1].

: Its holding subsidiary Liyuan (Asia Pacific) will sell a total of 106,800 tons of lithium iron phosphate cathode materials to Sunwoda from 2026 to 2030, with an expected sales amount of approximately 4.5-5.5 billion yuan [2].

The core features of this model include:

• Volume Locked
  : Agree on minimum purchase volume and maximum supply volume, calibrate demand dimensions every two years
• Flexible Pricing
  : Specific unit price is determined monthly by both parties according to the agreement terms
• Pricing Mechanism
  : Adopt the combination of ‘raw material + processing fee’; raw material prices follow the market and are settled based on the previous month’s SMM average price [3]

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Lithium iron phosphate material prices have experienced severe fluctuations:

• End of 2022
  : 173,000 yuan/ton
• August 2025
  : 34,000 yuan/ton (a drop of 80.2%)
• November-December 2025
  : Rebounded to approximately 39,100 yuan/ton, with a weekly increase of 2.62% [4]

The overall rise in raw material costs constitutes the core driver of price increases:

Raw Material	Price Change	Increase Rate
Battery-grade lithium carbonate	94,000-100,000 yuan/ton (mid-year low → December)	Over 50%
Phosphoric acid	6,300-6,500 yuan/ton → 6,800-7,000 yuan/ton (since August)	Approximately 8%
Lithium hexafluorophosphate	55,000 yuan/ton →120,000 yuan/ton (since November)	Over 118%

In 2024, the domestic lithium iron phosphate industry faced severe overcapacity:

• Capacity: Approximately 4.7 million tons (34% year-on-year increase)
• Actual output: Only over 2.3 million tons
• Capacity utilization rate: Approximately 50%
• The entire industry has been in continuous loss for more than 36 months
• Average asset-liability ratio of 6 major listed enterprises: 67.81% [4][5]

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Longpan Technology adopts the ‘raw material + processing fee’ model, with negotiations focusing on the processing fee part [3]:

:

• Hunan Yuneng has clearly increased the processing fee for all lithium iron phosphate products by 3,000 yuan/ton (excluding tax) on the existing basis
• Enterprises such as Longpan Technology and Wanrun New Energy have followed suit in price increases
• Leading enterprises have launched the second round of negotiation for price increases [4]

Demand explosion directly improves capacity utilization efficiency:

• Longpan Technology: Capacity utilization rate continued to rise in Q3 and Q4, with a large increase [3]
• Hunan Yuneng: Basically full production and sales from January to September, stable production and sales in Q4
• From January to November 2025, China’s cumulative lithium iron phosphate output reached 3.1129 million tons, a year-on-year increase of 59.28%
• The capacity utilization rate of the lithium iron phosphate industry reached 75.75% in November [3]

Downstream battery enterprises accept cost transmission:

• Farasis Energy: Has established a price linkage mechanism, and some products have realized price increases [6]
• Dejia Energy: Announced that battery product prices will increase by 15% from December 16 [6]
• Gotion High-Tech: Mitigates raw material price fluctuations through long-term agreements, self-supply in the supply chain, etc.

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Calculated only based on the Chunergy New Energy order, the average annual purchase volume will reach 260,000 tons in the next five years, which has exceeded Longpan Technology’s current designed capacity and will test its supply capacity [2].

The price trend of lithium carbonate still has uncertainty:

• In 2025, the price of lithium carbonate showed a ‘W’-shaped trend overall
• It is expected that the price center will move up to 100,000-150,000 yuan/ton in 2026 [7]
• The actual profit level of enterprises depends on the game between the increase in processing fees and the increase in raw material prices

The trend of increasing industry concentration is obvious:

• In Q3 2025, the market share of CR5 enterprises reached 65%, an increase of 10 percentage points compared to the same period last year
• Enterprises with resource supporting capabilities will have more cost advantages [3]

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Through the ‘volume-locked, price-unlocked’ long-term agreement model, Longpan Technology has the following advantages in the current market environment:

1. Demand Guarantee
   : Long-term orders lock downstream sales channels, ensuring capacity utilization rate
2. Price Transmission
   : The processing fee negotiation mechanism allows cost pressures to be transmitted downstream
3. Industry Recovery
   : With new capacity input and demand upgrade, the supply-demand pattern of the lithium iron phosphate industry tends to improve

: Raw material price fluctuations, order execution falling short of expectations, intensified industry competition

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[1] Sina Finance - “Export Volume Soars 1759% YoY! Lithium Iron Phosphate Sparks Another Wave of ‘Order Locking and Capacity Expansion’” (https://finance.sina.com.cn/roll/2025-12-09/doc-inhaeqee2754537.shtml)

[2] CLS.cn - “Continuously ‘Snatching Lithium’! Longpan Technology Signs Another Large Order of Nearly 5 Billion Yuan” (https://www.cls.cn/detail/2217719)

[3] Sina Finance - “Lithium Iron Phosphate Price Hike Wave: Supply-Demand Reconstruction Under Demand Explosion” (https://finance.sina.com.cn/cj/2025-12-17/doc-inhcavhm7547602.shtml)

[4] Guancha.cn - “Transmitting Cost Pressure, Responding to ‘Anti-Involution’: Lithium Iron Phosphate Leaders Launch ‘Production Cut Maintenance + Price Increase’ Combination Punch” (https://www.cls.cn/detail/2240548)

[5] Shanghai Nonferrous Metals Network - Lithium Carbonate Price Data (https://hq.smm.cn/h5/Li2CO3)

[6] Eastmoney.com - “Raw Material Price Surge Transmitted to Terminal: Power Battery Industry Chain Sees Price Hike Wave” (https://finance.eastmoney.com/a/202512273603337628.html)

[7] Securities Times - “Lithium Carbonate Price Breaks 130,000 Yuan/Ton” (https://www.stcn.com/article/detail/3560191.html)