Industry Chain Impact and Investment Logic Amid the Lithium Iron Phosphate Price Surge

Recent LFP material prices have seen a phased upward trend: power-type products have risen to around 39,500 yuan/ton, and energy storage-type products to about 37,000 yuan/ton. The increase is driven by both raw material costs and demand [2]. Since August, intermediate products like phosphoric acid and ferrous sulfate have risen to 6,800–7,000 yuan/ton and 300 yuan/ton respectively, directly pushing unit production costs from 9,000 yuan/ton to nearly 10,000 yuan/ton, and it is expected to further reach 11,000–12,000 yuan/ton by 2026 [1]. The price of lithium carbonate, the core raw material for cathodes, has also returned above 96,000 yuan/ton; if demand continues to be strong, it may hit 150,000 yuan/ton or even 200,000 yuan/ton [4]. The material-side “cost-price” channel is being rebuilt; industry associations are advocating pricing based on cost indices, guiding enterprises to collectively address “below-cost” vicious competition, and clearly calling for “no expansion first” until prices return to a reasonable range [1][2].

Downstream, power and energy storage battery demand is being released concentratedly. In the first three quarters of 2025, domestic LFP loading volume accounted for over 81%, and in the energy storage sector, it accounted for nearly 99.9%, making material-side capacity utilization generally above 95% and long-term “scheduled production until 2026” [1][3]. Based on the “supply shortage” situation, leading material enterprises have successively conveyed price increase demands; some clearly stated a unified increase of about 3,000 yuan/ton starting from January 2026 [2]. Driven by industry price adjustment consensus, “involution” pressure has been alleviated to some extent, and the price mechanism is transitioning from “scale war” to “quality war” [1][5].

Lithium carbonate and other lithium salt supply and demand are in a phase of both volume and price growth; currently, the supply-demand gap is still obvious: 2025 supply is expected to be 1.7–1.75 million tons, demand 1.55 million tons. If demand growth reaches over 30% in 2026, prices may break through 150,000 yuan/ton [4]. Major lithium salt factories (such as Tianqi Lithium/Ganfeng Lithium) have obtained high gross margins due to “price increases + capacity locking”, with significant profit improvements; however, they still need to警惕 the reverse feedback of high prices suppressing demand [4]. Therefore, in the current cycle, upstream raw material sales revenue and profitability have significant elasticity; investors can focus on the entire lithium ore/lithium salt chain with cost control and long-term agreement advantages.

Leaders like Hunan Yuneng, Fulin Precision, Defang Nano, Wanrun New Energy, Longpan Technology, Anda Technology have inventory scheduled until next year, with significantly increased capacity utilization and obvious characteristics of booming production and sales [5]. Most enterprises increase processing fees through high-compaction/high-end products (premium of 1,000–3,000 yuan per ton for high-end products) and strengthen the ability to pass on lithium carbonate price increases; profitability improved significantly in Q3 2025: for example, Hunan Yuneng achieved a net profit of 340 million yuan in a single quarter, a year-on-year increase of 235%; Wanrun New Energy and Longpan Technology saw significant narrowing of losses, and industry confidence is improving [5]. However, some low-end capacities still face elimination risks due to weak price elasticity and unprofitable operations. Mid-cap enterprises need to gradually transition to “third-generation/high-compaction” products; otherwise, they will be unable to benefit from price increase expectations.

The power battery segment (accounting for 40%-60% of vehicle costs) with LFP proportion exceeding 80% faces rising costs and shipment pressure: if high costs are fully absorbed by battery enterprises, existing profit margins will be compressed; passing them on to vehicle manufacturers requires bearing order or subsidy pressure, and bargaining power is limited under price-cut competition, leading to a tense profit chain between “battery end - vehicle enterprise end - terminal” [3]. Energy storage system integrators also face dual pressure of rising cell costs and continuous decline in system-side prices. Overall, downstream enterprises need to rely on technological upgrades (higher N/P ratio, more lightweight systems, etc.), supply chain forecasting capabilities, and high-bargaining customer structures to partially absorb rising costs; otherwise, endogenous profits will be eroded.

(References: [0] Jinling AI Brokerage API Interpretation (2025-12-17))

1. Upstream Raw Materials
   : In the high-price stage of raw materials like lithium carbonate/phosphorus, enterprises with resource and long-term agreement advantages are most likely to amplify profits; need to关注 whether “high prices + capacity shipment” match, and whether there is a high inventory risk.
2. Midstream Cathode Materials
   : Leading manufacturers’ bargaining power in price increases and high-end products is recovering; investment focus is on enterprises with high-compaction/LMFP/precursor supporting capabilities, while avoiding low-end capacities sensitive to costs.
3. Downstream Vehicles/Batteries
   : Head players like CATL can improve profits through volume and price advantages due to external expansion and wide customer base; however, small and medium-sized battery and vehicle enterprises need to警惕 short-term gross margin pressure if they cannot obtain cost pass-through space.

• Uncertainty of Price Pass-through
  : If downstream terminals cannot bear the costs, price increases may be forced to “fall back”, and the pace of profit repair will be delayed.
• Contradictory Capacity Release
  : If there is excessive short-term expansion or low-end capacity release under price increase expectations, it may temporarily weaken the industry’s bargaining foundation.
• Material Cycle and Demand Fluctuations
  : Need to关注 whether energy storage and power battery demand continues to grow at a high rate; otherwise, high upstream prices like lithium carbonate may lead to demand-side retraction.

The LFP price surge has restructured the profit distribution of “raw materials → materials → batteries → vehicles” in the short term, with price elasticity tilting upstream and cost pressure downstream coexisting. Investors should focus on identifying enterprises that can master high-end technologies, ensure production and sales matching, and have effective cost pass-through capabilities. In addition, if more in-depth profit penetration, high-end product penetration rates of various enterprises, and supply chain bargaining power data are needed, it is recommended to use Jinling AI’s

[0] Jinling AI Brokerage API Data (2025-12-17)
[1] “Lithium Iron Phosphate Sees Price Surge! Leading Enterprises Have Locked Orders in Advance and Expanded Production; Industry Warns”, East Money, https://finance.eastmoney.com/a/202512153591873231.html
[2] “From ‘Scale Competition’ to ‘Quality Competition’: Leading Lithium Iron Phosphate Enterprises Raise Prices One After Another”, Securities Times, https://www.stcn.com/article/detail/3522424.html
[3] “Will Buying a Car Cost More? The Technology Route Dispute Behind the Lithium Iron Phosphate Price Surge”, Netcom Auto, https://www.news18a.com/news/storys_216261.html
[4] “Lithium Carbonate Price Returns to 100,000 Yuan Mark”, People’s Daily Online, http://paper.people.com.cn/gjjrb/pc/content/202511/24/content_30116438.html
[5] “Lithium Iron Phosphate Market ‘Booming Production and Sales’ — Leading Enterprises’ Orders Scheduled Until Next Year”, China Business News (PDF), http://dianzibao.cb.com.cn/images/2025-11/17/19/2628B15B.pdf