In-depth Analysis of Longpan Technology's Lithium Iron Phosphate Production Cuts & Maintenance and Industry Processing Fee Increase

Based on collected data and analysis, we now provide an in-depth research report on Longpan Technology and the lithium iron phosphate industry.

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The lithium iron phosphate (LFP) industry is experiencing its longest loss cycle in history. According to authoritative industry data, between the end of 2022 and August 2025, the price of LFP materials plummeted from 173,000 yuan/ton to 34,000 yuan/ton, a drop of 80.2% [1][2]. This sharp price decline has led to the entire industry suffering continuous losses for over 36 months, with only 16.7% of enterprises profitable—far lower than other core lithium battery materials such as ternary cathodes and anodes [3].

Looking at cumulative loss data of leading enterprises, five major listed LFP companies—Deshun Nano, Wanrun New Energy, Anda Technology, Fengyuan Co., and Longpan Technology—have accumulated losses exceeding 10.9 billion yuan from 2023 to the third quarter of 2025 [3]. The average asset-liability ratio of six listed enterprises is as high as 67.81%, reflecting severe financial pressure across the industry [1].

In 2024, domestic LFP cathode material production capacity approached 4.7 million tons, a year-on-year increase of about 34%, but actual output was only over 2.3 million tons, with a capacity utilization rate of only about 50% [1]. This severe oversupply situation is one of the important reasons for price wars and continuous industry losses. However, since 2025, driven by the rapid growth of downstream new energy vehicle and energy storage markets, demand for LFP materials has surged, and leading enterprises’ orders have been scheduled until 2026, with capacity utilization rates significantly improved [2].

From the perspective of profit distribution in the industrial chain, in recent years, the upstream, midstream, and downstream of the lithium industry chain have shown significant differentiation. Upstream resource enterprises previously experienced a price trough; Tianqi Lithium and Ganfeng Lithium recorded net profits of -7.905 billion yuan and -2.074 billion yuan respectively in 2024 [2]. Midstream LFP material enterprises continue to face rising raw material prices and cost pressure; only Hunan Yuneng made a profit in the first three quarters of 2025, while Longpan Technology and Deshun Nano have been losing money for more than two consecutive years [2]. Downstream terminal enterprises maintain relative resilience relying on scale effects and industrial chain discourse power.

Zhang Jinhui, a senior researcher at Xinluo Information, pointed out: “(LFP material enterprises) If we don’t raise prices, everyone will lose money, and the industrial chain will be unhealthy. Each link should have reasonable profits. We can’t have individual enterprises making money while the entire industrial chain is losing all its profits.” [3]

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From December 25 to 26, 2025, four core LFP enterprises successively issued production cut and maintenance announcements, with a maintenance period of one month, concentrated at the end of 2025 to the beginning of 2026 [2]:

• Hunan Yuneng
  : Capacity utilization rate has exceeded 100% since the beginning of the year; it plans to maintain some production lines starting from January 1, 2026, for an expected one month. This maintenance is expected to reduce the company’s phosphate cathode material output by 15,000 to 35,000 tons [1]

• Wanrun New Energy
  : LFP production lines have been operating at over capacity since the fourth quarter of 2025; it will carry out production cuts and maintenance on some lines starting from December 28, 2025, for an expected one month. This maintenance is expected to reduce the company’s LFP output by 5,000 to 20,000 tons [1]

• Anda Technology
  : Expected to reduce LFP output by 3,000 to 5,000 tons [2]

• Deshun Nano
  : The specific production cut scale is not yet clear; maintenance is part of normal business operations [2]

Excluding Deshun Nano, the combined production cut scale of the three enterprises ranges from 23,000 to 60,000 tons [2].

Regarding the concentrated release of maintenance announcements by four major LFP manufacturers, many industry insiders analyze that this is not a coincidence but has dual strategic considerations [2]:

12月电池级碳酸锂现货价格回升至9.9万元/吨，期货主力合约价格达13万元/吨，较年内低点5.8万元/吨涨幅超110%[2]。通过减产可以减少对高价碳酸锂的采购需求。

A relevant person from a listed LFP company said: “The entire LFP industry has been losing money for nearly three consecutive years, and raw material prices are still rising now. We hope to further transfer costs to the terminal to ensure the healthy and stable development of the industry.” [2]

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In December 2025, the LFP industry saw a wave of processing fee increases [3]:

• Hunan Yuneng
  : Clearly announced that the processing fee for all LFP products will be increased by 3,000 yuan/ton (excluding tax) [1]
• Longpan Technology
  : Followed the price increase trend of industry leaders [1]
• Wanrun New Energy
  : Also followed the price increase [1]

This wave of price increases is the second round after the continuous rise in LFP prices in November. It is worth noting that the price increase in November was more based on rising material costs, while this round is an active processing fee increase by LFP manufacturers to “alleviate difficulties” [3].

The dual cost pressures faced by LFP manufacturers are intensifying:

: As the core raw material of LFP, lithium carbonate price fluctuations have an important impact on the industry’s cost side. Zhongyan Puhua Industry Research Institute pointed out that for every 10,000 yuan/ton increase in the price of upstream lithium carbonate, the cost of LFP cathode materials increases by about 2,300 to 2,500 yuan/ton [2].

: Sulfuric acid is a key raw material for ferric phosphate and ferrous sulfate. The price of sulfur was about 1,500 yuan/ton at the beginning of 2025 and has climbed to 4,000 yuan/ton at the end of the year, and its price increase effect is further amplified through the precursor link [2].

When previously accepting investor research, LFP manufacturers Wanrun New Energy and Hunan Yuneng both revealed that they have carried out business negotiations with customers and achieved good results [3]. Xingfa Group also disclosed that its LFP segment lost nearly 200 million yuan in 2024 and is expected to narrow significantly in 2025 [3].

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Longpan Technology (Stock Code: 603906.SS) is a comprehensive energy and chemical enterprise covering automotive fine chemicals such as lubricants, coolants, and automotive urea, as well as LFP cathode material business [0]. As of December 31, 2025, the company’s stock price was $20.01, showing a significant annual increase.

Indicator	Data
Current Price	$20.01
YTD Increase	+100.90%
1-Year Increase	+93.15%
3-Year Increase	-15.46%
5-Year Increase	-16.75%

From the stock price trend, Longpan Technology rose from $6.67 to $20.01 between August 2024 and December 2025, an increase of up to 200%, with a maximum of $24.00 during the period [0]. The stock price is currently slightly below the 20-day moving average ($20.10) but above the 50-day moving average ($19.29) and the 200-day moving average ($14.94), showing a medium-term upward trend.

Despite the bright stock price performance, Longpan Technology’s financial fundamentals still face major challenges [0]:

:

• P/E Ratio: -30.75x (negative value indicates the company is still in loss)
• Net Profit Margin: -5.66%
• Operating Profit Margin: -7.13%
• ROE (Return on Equity): -14.74%

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• Current Ratio:0.91 (below 1, indicating short-term debt repayment pressure)
• Quick Ratio:0.77

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• P/B Ratio:4.56x

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• Q3 2025 EPS: $-0.04 (expected $0.10, actual is 138.47% below expectation)
• Q3 Revenue: $2.20B (expected $2.38B, 7.44% below expectation)

According to the evaluation of professional financial analysis tools [0]:

: Conservative—The company shows a high depreciation/capital expenditure ratio; as investments mature gradually, there may be room for profit improvement.
: High Risk—The company faces high financial leverage and debt repayment pressure.
: Free cash flow is positive (220,135,309), indicating that cash flow from operating activities is acceptable, but overall profitability still needs improvement.

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: Since the second half of 2025, driven by the explosive demand for energy storage batteries, orders of various LFP manufacturers have surged, production lines are operating at full capacity, and some enterprises’ orders have been scheduled until Q1 2026 [2]. Data from GGII (High-Tech Industry Research Institute for Lithium Batteries) shows that in the first half of 2025, LFP material shipments reached 1.61 million tons, a year-on-year increase of 68% [2].

: The joint production cuts and maintenance of the four leading enterprises will effectively ease market supply pressure, which is expected to have a certain impact on lithium carbonate prices in the short term and at the same time send a positive signal of industry stabilization to the market.

: With the 3,000 yuan/ton increase in processing fees and the progress of negotiations with customers, the channel for cost pressure to pass to the downstream is opening. Enterprises such as Wanrun New Energy and Hunan Yuneng have stated that negotiations have achieved good results.

: The sustained rise in lithium carbonate and sulfuric acid prices may erode the profit improvement space brought by processing fee increases. If the increase in raw materials exceeds the increase in processing fees, the actual profit improvement of enterprises will be greatly reduced.
: There is a time lag from cost increase to processing fee increase and then to enterprise profit improvement; during this period, enterprises still need to bear cost pressure.
: The current industry capacity utilization rate is only 50%, and the problem of overcapacity has not been fundamentally solved. If the capacity utilization rate declines in the future, price wars may intensify again.

: Sustained growth in downstream demand is the fundamental driving force for industry recovery. It is expected that the new energy vehicle and energy storage markets will continue to maintain a high growth rate in 2026, providing support for LFP material demand.
: Industry leading enterprises may obtain better profitability by upgrading technology to increase product added value. Sustained increase in R&D investment is the foundation of long-term competitiveness.
: The long-term healthy development of the industry requires reasonable profit distribution among all links of the industrial chain. Zhongyan Puhua Industry Research Institute pointed out that the LFP industry needs to establish a more reasonable profit distribution mechanism to avoid excessive squeezing of the profit space of midstream material enterprises [2].

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:

• Stock price increased by over 100% within the year; market expectations for industry recovery have been reflected
• The company followed the industry leaders to increase prices; expectations for performance improvement have been enhanced
• New energy vehicle and energy storage markets have strong demand, with full orders

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• The company is still in loss; P/E ratio is negative
• High financial risk (high debt ratio, current ratio below 1)
• Sustained rise in raw material costs may erode profits
• The industry competition pattern has not been fundamentally improved

Zhang Jinhui, a senior researcher at Xinluo Information, said: “Now few enterprises in the LFP industry are making money. This round of LFP price increases is reasonable from the perspective of supply and demand. The specific price increase range depends on the negotiation results of each company. Overall, the LFP industry is continuing to improve.” [3]

Overall, the general processing fee increases and production cuts & maintenance in the industry have created conditions for ending the three-year loss cycle, but whether real profit improvement can be achieved still needs to observe raw material price trends, cost pass-through effects, and downstream demand changes. It is expected that the industry will achieve partial and phased profit improvement in 2026, but full recovery still takes time.

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[1] Caixin Society - “Passing Cost Pressure, Responding to ‘Anti-Involution’ LFP Leaders Launch ‘Production Cuts & Maintenance + Price Increase’ Combination Punch” (https://www.cls.cn/detail/2240548)

[2] Daily Economic News - “4 LFP Leaders Cut Production Against the Trend to Compete for Lithium Carbonate Pricing Power? Industry Calls for Reasonable Profit Distribution Among Industrial Chain Links” (https://www.nbd.com.cn/articles/2025-12-29/4199811.html)

[3] Daily Economic News - “After Three Years of Hardship, Is LFP Price Increase Inevitable? Industry Association Launches ‘Anti-Involution’ Initiative, Giants Jointly Increase Processing Fees” (https://www.nbd.com.cn/articles/2025-12-02/4165492.html)

[0] Jinling API Database - Longpan Technology (603906.SS) Company Overview and Financial Analysis