Lithium iron phosphate low price competition ‘bottomless’, the industry's future out of the road in what direction?

With the continuous decline in the price of lithium carbonate, the Ferrous lithium phosphate market has recently shown a downward trend. With the approaching of the end of the year, the main suppliers of Ferrous lithium phosphate cathodes are about to launch a new round of negotiations and tenders in 2025. However, the future of the industry is uncertain. Against the background of expanding production capacity, market competition is becoming increasingly fierce, and Ferrous lithium phosphate enterprises are facing unprecedented challenges.

It is understood that due to the continuous release of new production capacity in 2024, the relationship between supply and demand in the Ferrous lithium phosphate market has undergone significant changes. Despite strong demand, the surge in supply has made it difficult for the vast majority of lithium iron phosphate companies to maintain profitability in the price war, resulting in long-term losses. This situation has aroused widespread concern in the industry, and many companies have high hopes for the upcoming negotiations in 2025, hoping to improve profitability through price adjustment strategies. However, the uncertainty of the market is still high, and the outcome of negotiations is hard to predict.

The main reason for this dilemma is that the processing fee income of Ferrous lithium phosphate enterprises can not cover the costs of raw materials, labor and equipment depreciation. In the state of sustained losses, enterprises have to consider reducing costs to maintain operations, but this often leads to purchasing low-quality raw materials and reducing the investment in human resource, which in turn affects the quality of cathode products and the performance of battery, and even poses a threat to the personal safety of consumers while driving. In addition, long-term financial pressure may also lead enterprises to face the risk of cash flow interruption, which will not only affect normal operations and employee enthusiasm, but also has a negative impact on the stock price and financing ability of listed companies. 

The insiders believe that long-term losses will not only weaken enterprises' investment in research and development of new technologies, thus restricting the innovation and development of the industry, but also have a chain reaction on the upstream iron phosphate industry. Due to the limited processing fee space of enterprises in Ferrous lithium phosphate, the upstream price space of iron phosphate has also been compressed, which leads to the loss situation for iron phosphate enterprises, posing a threat to the healthy development of the entire industrial chain.

What is more serious is that fierce market competition and bottomless low-price strategies may accelerate the elimination of backward production capacity, but at the same time, a large number of high-quality enterprises may face the risk of bankruptcy. If this situation continues to develop, it may lead to the formation of industry monopolies and further weakening the competitive vitality and innovation driving force of the market.

In the background of seeking new markets overseas, domestic new energy enterprises need to gain recognition and trust from overseas consumers through excellent product quality, and establish a good reputation made in China, so as to obtain sustainable demand growth in overseas markets.

Faced with the current difficulties, the lithium iron phosphate industry urgently needs to find a breakthrough. This includes strengthening industry self-discipline and avoiding vicious competition; Intensify technological research and development efforts to enhance product added value; And explore new market applications, expand demand space, etc. Only through the joint efforts of the entire industry can the lithium iron phosphate industry be pushed out of its slump and achieve healthy and sustainable development.