LFP Manufacturers Launch Wave of Price Hikes for the New Year

In the final days of 2025, China's lithium iron phosphate (LFP) cathode material industry was brewing a collective action. Multiple leading cathode material producers successively signaled plans to raise product processing fees starting from the first day of the new year.

On the afternoon of December 31, 2025, Li Feng, from the sales department of an LFP cathode material producer, breathed a long sigh of relief after sending out the last notification letter about product price adjustments. The core message of the letter was just one line: effective January 1, 2026, the processing fee for the company's entire series of LFP products would be uniformly increased by 3,000 RMB per ton (excluding tax).

He knew this email would cause ripples among downstream battery customers, but it was a necessary and unavoidable step. "Raw material prices change daily. If we don't adjust now, we lose more with every ton produced," he explained. This price hike isn't a direct increase in the selling price of LFP cathode material, but rather an adjustment to the "processing fee" component, which represents the reward for production services.

This is not an isolated case. In the last few days of 2025, a collective action was indeed brewing within the domestic LFP cathode material industry.

Several leading producers, including Longpan Technology (603906.SH), Wanrun New Energy (688275.SH), and Anda Technology, among others, successively signaled plans to raise product processing fees from New Year's Day.

This is a collective response from the industry, coming after more than three years of a price winter, to the rapid surge in prices of the core raw material, lithium carbonate, and structurally strong downstream demand.

The industry's unanimous choice to raise the "processing fee" rather than adjust the total price (which combines raw material cost and processing fee) is primarily because, under industry chain pricing conventions, raw material (lithium carbonate) costs largely fluctuate with the market. The processing fee more directly reflects the production enterprise's technical, manufacturing, and operational value, is more flexible to adjust, and aims to clearly signal to customers that cost pressures stem from squeezes in the manufacturing segment.

According to Shengyishe data, as of December 31, 2025, the benchmark price for battery-grade lithium carbonate had stabilized above the 120,000 RMB/ton mark, quoted at 120,400 RMB/ton, with futures prices even exceeding 130,000 RMB/ton.

In early December, the benchmark price for battery-grade lithium carbonate was still hovering around 100,000 RMB/ton. As the core raw material for LFP, lithium carbonate prices surged over 20% in just one month. The current lithium carbonate price has significantly exceeded the affordable range for downstream material producers.

Passing on cost pressures has become an inevitable choice for survival. From Hunan to Jiangsu, and to Hubei, notifications of processing fee increases are being issued one after another. An industry-wide self-rescue effort aimed at repairing profits kicked off before the 2026 New Year bell rang.

In the last week of 2025, conference rooms at multiple LFP cathode material companies were focused on highly consistent topics: how much to increase, how to implement it, and when to do it.

Li Feng's company was one of the early movers with a clear stance. On December 30, the company formally announced its price hike decision in communications with investors: a 3,000 RMB/ton increase for the entire product series, effective January 1, 2026. This was not an impulsive decision. The processing fee for their mainstream products had been hovering near the cost line for a long time. For every 10,000 RMB/ton increase in lithium carbonate, their material cost rises by approximately 2,500 RMB.

Li Feng illustrated that lithium carbonate prices had risen by over 20,000 RMB in the past month, meaning an additional cost of 5,000 RMB per ton of cathode material. Without a price increase, the company would be operating at a straight loss.

Almost simultaneously, in Changzhou, Jiangsu, Longpan Technology was also moving forward with price increases. The Economic Observer learned from Longpan Tech that the specific increase amount was still being finalized, but the direction was confirmed. The price of lithium iron phosphate, another key raw material, also remained under pressure due to high upstream costs like sulfur.

Coupled with strong downstream demand from energy storage and power batteries, especially the surge in demand for high-energy-density products like "3.5-generation" and "fourth-generation," this collectively forms the basis for companies' confidence to raise prices.

For Longpan Technology, "The issue now isn't whether we have orders, but how to allocate capacity and ensure profits."

Wanrun New Energy (688275.SH), based in Hubei, also planned to raise processing fees to cope with cost pressures brought by "continuously high demand in downstream energy storage and power markets." A board member told the Economic Observer that driven by new scenarios like AI data center energy storage and power market reforms, energy storage orders are exploding, creating particularly urgent demand for high-performance LFP.

This wave of price hikes spread rapidly.

Anda Technology also reportedly planned to increase processing fees for its full series of LFP products by 3,000 RMB/ton effective January 1, 2026. Meanwhile, Fuling Jingong (300432.SZ) did not specify an amount but stated they would "adjust prices according to market conditions." Fengyuan Co., Ltd. also expressed willingness to raise prices.

According to a Shanghai Metals Market (SMM) analysis in late December 2025, LFP cathode material producers and downstream cell manufacturers were engaged in intensive price negotiation talks. Leading companies were already into their second round of talks, but the first round for most other material plants had not yet fully materialized.

SMM analysts believe that downstream cell manufacturers generally accept the trend that rising raw material costs necessitate price increases for cathode materials. However, the specific amount and implementation timing still require negotiation.

Shengyishe data on December 31, 2025, showed the battery-grade lithium carbonate benchmark price at 120,400 RMB/ton. On December 29, SMM's battery-grade lithium carbonate price range had already reached 118,000 to 120,000 RMB/ton. The strong breakthrough of this key psychological price level for raw materials at year-end turned price hikes for cathode material producers from an "option" to a "necessity."

A sales executive from Hunan Yuneng (301358.SZ) told the Economic Observer that this price increase is based on multiple factors including cost, market conditions, and the overall industry situation.

The executive further stated that the price trend of lithium carbonate directly influences their industry's trajectory. At the end of 2022, lithium carbonate prices peaked near 600,000 RMB/ton, then plummeted to just over 30,000 RMB/ton by mid-2025, before quickly rebounding to 120,000 RMB/ton. While downstream vehicle and battery manufacturers can smooth out such roller-coaster swings through long-term contracts and futures hedging, LFP cathode material producers caught in the middle are relatively passive.

Even at the current lithium carbonate price of around 120,000 RMB/ton, the raw material cost already constitutes the vast majority of the total cost for LFP cathode material, leaving very little profit margin for the processing segment.

Calculations by the China Industrial Association of Power Sources (CIAPS) put the industry's average cost range between 15,700 RMB/ton and 16,400 RMB/ton (excluding tax). Previously, many products were sold at or even below this range, meaning companies were sustaining losses to maintain customers and capacity. Now, with the sharp rise in lithium carbonate, the cost base has shifted upward directly. Without price increases, the entire segment would break.

Looking at the structurally strong market demand, cost provides the push, while demand provides the pull.

Li Feng repeatedly emphasized the term "structural shortage" to the reporter.

He said, "The perception of overcapacity applies to standard power-grade products. But in energy storage and large cylindrical battery sectors, demand for high-end LFP with characteristics like 'high compaction density' and 'long cycle life' is very strong. Such products have high technical barriers, and only a few manufacturers can produce them stably. Orders are already backlogged beyond Q1 2026."

A Wanrun New Energy board member believed that the explosion of new applications like large-scale domestic and international energy storage projects and backup power for AI data centers, which place extreme demands on battery lifespan and safety, further enhances the premium capability of high-end LFP. "The market isn't recovering across the board; it's rapidly concentrating towards leading companies and high-end products. With good products, we naturally gain pricing power."

From the perspective of the aforementioned Hunan Yuneng executive, behind this wave of price hikes lies a deeper consideration: the industry's collective reflection on the more than three years of brutal price war.

CIAPS Deputy Secretary-General Tang Yan disclosed data in November 2025: from late 2022 to August 2025, LFP material prices plummeted from 173,000 RMB/ton to 34,000 RMB/ton, a drop of 80.2%, with the entire industry sustaining losses for over 36 consecutive months.

The Hunan Yuneng sales executive recalled, "During that time, to grab orders, companies would quote any price. The industry's average asset-liability ratio reached 67.81%. Continuing like this would erode the entire advantage of the Chinese supply chain through internal competition."

It was against this backdrop that CIAPS published the "LFP Material Industry Cost Research" in November, establishing a cost baseline and calling on companies to cease vicious competition below cost.

The aforementioned Wanrun New Energy board member viewed this collective price hike, in a sense, as a market response to the association's "anti-involution" initiative. "Companies realize that only with reasonable profits can they invest in R&D, iterate technology, ensure quality, and compete sustainably globally. Now, with rising raw material costs and existing demand, it's the right window to repair profits and rebuild a healthy industry ecology."

Therefore, during internal decision-making, despite concerns about customer loss, the consensus for "survival with quality" prevailed. Choosing the start of 2026 for the price hikes addresses immediate cost pressures and also symbolizes the industry's hope for a new beginning in the new year.

Is the wave of price hikes initiated by LFP cathode material manufacturers merely short-term cost pass-through, or a signal of an industry cycle reversal?

Miao Min, chief new energy analyst at Guojin Securities, believes this is an urgent cost-driven repair. "This price increase trend starting from January 2026 is expected to continue, likely entering a medium-term channel of stability with slight increases," she noted. The certainty of processing fee increases is strong. Currently, leading companies have full order books, some have even paused accepting new orders, and supply and demand for high-end products remain tight. Meanwhile, the release of new effective capacity from the supply side takes time, while low-end capacity is being phased out and cannot quickly fill the market gap. Additionally, with possible further increases in lithium iron phosphate prices in 2026, cost-side support remains, making a short-term upward trend in processing fees evident.

Jiang Jiahui, an analyst at Gaogong Industry Institute (GGII), predicted this scenario as early as March 10, 2025. He analyzed then: "Subsequently, with rising raw material prices and the iterative development of enterprise production processes, a new round of price negotiations may open, and LFP prices are expected to face upward pressure." He added that the current situation validates this judgment, and the driving force for price increases is composite: "The recent rise in LFP prices is the result of combined effects from rising upstream material costs, recovering market demand in the second half of the year, and structural shortages of high-end products."

Infolink Consulting, in its late December 2025 weekly report, provided recent price evidence. Data showed that as of December 22, the average price of spodumene concentrate had risen nearly 20% compared to two weeks prior, and the spot price average for battery-grade lithium carbonate had increased 8% week-on-week.

However, whether this signifies the industry has completely emerged from the trough is difficult to conclude definitively at this point.

Zhai Linlin, an LFP analyst at Longzhong Information, believes that increasing market demand and product technology iteration are the two main drivers for the recent LFP price increase. This creates a positive cycle. But she also cautions that the industry's fundamental issue lies in capacity structure, not total insufficiency.

The view of CIAPS Deputy Secretary-General Tang Yan carries a more cautionary tone. He believes that although demand has increased significantly, underlying issues like "unresolved cost pressures for LFP materials, disorderly competition coupled with unreasonable profit distribution along the industry chain" persist. This implies that the current price hikes represent more of a redistribution of industry chain profits and a restorative return of industry value, rather than a comprehensive bull market driven by exploding demand.

SMM analysis points out that price negotiations are ongoing, and the acceptance level and speed of downstream cell manufacturers will determine the actual implementation effectiveness and sustainability of this round of increases. This suggests that LFP manufacturers still face challenges in smoothly passing costs downstream to the battery segment.

The market sentiment has clearly changed: shifting from extreme pessimism and intense internal competition to collective self-rescue and value repair driven by costs. But whether "price increases" can ultimately translate into tangible "profit gains" for enterprises and guide the industry towards a new stage focused on technological innovation and quality competition, rather than repeating past mistakes, will be the key theme for observing this industry in 2026.

In Li Feng's view, the price increase is just the first step. The new challenge for his company will be how to build more stable and healthy commercial relationships with downstream partners based on the new price level.