Abstract
This paper comprehensively reviews the production processes of lithium iron phosphate (LiFePO4) cathode material, introduces the development status of the LiFePO4 cathode material industry in China, including capacity, competitive landscape, and price trends. It analyzes the challenges faced by the LiFePO4 industry, such as severe overcapacity, drastic fluctuations in raw material lithium carbonate prices, the adverse impact of European and American trade protection policies, and the risk of substitution by new technologies. Furthermore, it proposes suggestions such as conducting lithium carbonate futures hedging operations, deploying LiFePO4 capacity overseas, and extending the upstream industrial chain.
1. Production Processes of Lithium Iron Phosphate Cathode Material
The production processes of LiFePO4 are mainly divided into solid-phase and liquid-phase methods. The solid-phase method is the most mature and widely applied. It typically involves mixing ferrous phosphate with lithium carbonate, followed by spray drying, sintering, and crushing to obtain LiFePO4. This method boasts simple synthesis equipment and processes, easy-to-control reaction conditions, and suitability for industrial production. However, it may result in poor product uniformity and consistency, high energy consumption, and partial sintering.
The liquid-phase method uses water as a solvent, mixing lithium carbonate, ferric nitrate, and ammonium phosphate to conduct a hydrothermal reaction to obtain a precursor, which is then crushed and sintered to obtain LiFePO4. This method allows raw materials to mix at the molecular level in solution, resulting in better product uniformity and consistency. However, the reaction process is complex and difficult to control.
Based on different precursors, the solid-phase method is further divided into the ferrous phosphate method, ferrous oxalate method, and iron oxide method. The ferrous phosphate method is widely used due to its high compaction density, mature process, low construction cost, and short construction period. The ferrous oxalate method and iron oxide method are less used due to poor electrochemical performance and low energy density of the products.
Table 1: Comparison of Different Production Processes of Ferrous Phosphate
| Process | Advantages | Disadvantages |
|---|---|---|
| Ammonium Method | Lowest cost; by-product ammonium sulfate has economic value | More impurities; requires wastewater treatment equipment |
| Sodium Method | Higher cost than ammonium method by approximately 1000 yuan/t; by-product sodium sulfate has lower economic value | Less impurities than ammonium method; requires wastewater treatment equipment |
| Iron Method | High purity product; no by-products; less pollution | Much higher cost than ammonium and sodium methods |
2. Development Status of Lithium Iron Phosphate Cathode Material Industry
2.1 Capacity
In recent years, domestic LiFePO4 capacity has grown rapidly. According to incomplete statistics, domestic LiFePO4 capacity was 970,000 tons per annum (t/a) at the end of 2021, exceeding 2.5 million t/a at the end of 2022, and reaching 3.884 million t/a at the end of 2023. There is 1.645 million t/a of LiFePO4 capacity under construction and 9.086 million t/a of planned but not yet constructed capacity, totaling 14.615 million t/a.
Table 2: Domestic Actual, Under Construction, and Planned Capacity of Lithium Iron Phosphate Enterprises at the End of 2023
| Type of Enterprise | Number of Enterprises | Actual Capacity (t/a) | Under Construction Capacity (t/a) | Planned Capacity (t/a) |
|---|---|---|---|---|
| Cathode Material Enterprises | 21 | 3,070,000 | 765,000 | 3,740,000 |
| Lithium Battery Manufacturers | 7 | 360,000 | 150,000 | 910,000 |
| Phosphorus Chemical/Phosphate Fertilizer Enterprises | 9 | 54,000 | 330,000 | 1,386,000 |
| Titanium Dioxide Enterprises | 5 | 50,000 | 70,000 | 980,000 |
| Other Cross-border Enterprises | 15 | 350,000 | 330,000 | 2,070,000 |
| Total | 56 | 3,884,000 | 1,645,000 | 9,086,000 |
2.2 Competitive Landscape
The domestic LiFePO4 cathode material industry has a relatively stable competitive landscape. Data shows that the CR3 (sum of market shares of the top three companies) and CR5 (sum of market shares of the top five companies) in the LiFePO4 cathode material industry were 57% and 83% respectively in 2019, and 54% and 73% respectively in 2022. Hunan Yuneng New Energy Battery Material Co., Ltd. accounted for 26%, and Shenzhen Defang Nano Technology Co., Ltd. accounted for 18%. In 2023, the CR3 and CR5 were 55% and 70% respectively. Hunan Yuneng’s shipments were 510,000 tons, accounting for about 31% of the industry, while Shenzhen Defang Nano’s shipments were 230,000 tons, accounting for about 14% of the industry, showing a trend of the strong becoming stronger.
Table 3: Top 5 Companies in Terms of Lithium Iron Phosphate Shipment Volume in 2023
| Rank | Company Name | Shipment Volume (tons) | Shipment Share (%) |
|---|---|---|---|
| 1 | Hunan Yuneng New Energy Battery Material Co., Ltd. | 510,000 | 30.91 |
| 2 | Shenzhen Defang Nano Technology Co., Ltd. | 230,000 | 13.94 |
| 3 | Hubei Wanrun New Energy Technology Co., Ltd. | 165,000 | 10.00 |
| 4 | Hubei Rongtong Advanced Materials Group Co., Ltd. | 154,000 | 9.33 |
| 5 | Changzhou Liyuan New Energy Technology Co., Ltd. | 90,000 | 5.45 |
2.3 Price Trends
Affected by raw material prices and industry cycles, LiFePO4 prices fluctuated significantly, rising from an average price of 35,500 yuan/t in December 2020 to 167,200 yuan/t in March 2022. The main reasons for the price increase were the rapid growth in demand for new energy vehicles and new energy storage, leading to a tight supply and demand for LiFePO4 cathode materials, and the increase in prices of raw materials such as lithium carbonate and ferrous phosphate.
From March 2022 to January 2023, LiFePO4 prices fluctuated between 167,200 yuan/t and 156,600 yuan/t, peaking at around 175,000 yuan/t. From February to December 2023, LiFePO4 prices fell to around 42,000 yuan/t. The reasons for this period of decline were: firstly, a large amount of LiFePO4 capacity was successively put into production in 2023, resulting in severe overcapacity; secondly, the price of lithium carbonate fell from a maximum of 600,000 yuan/t to 100,000 yuan/t at the end of the year, and LiFePO4 lost cost support.
3. Challenges Faced by the Lithium Iron Phosphate Cathode Material Industry
Since 2022, the lithium iron phosphate industry has experienced the construction and commissioning of a large number of plants. According to incomplete statistics, by the end of 2023, the actual capacity of lithium iron phosphate had reached 3.884 million tonnes per annum (MTPA). However, sales for that year were only 1.65 million tonnes, leading to severe overcapacity.
Further analysis reveals that there is currently about 1.645 MTPA of lithium iron phosphate capacity under construction. If these under-construction capacities are successively commissioned within the next two years, the total capacity of lithium iron phosphate may reach 5.53 million tonnes by 2025. Nevertheless, market forecasts generally predict that the demand for lithium iron phosphate in 2025 will be only between 2.5 million and 3 million tonnes. Therefore, it is foreseeable that the lithium iron phosphate industry will face persistent overcapacity issues in the coming years, which will result in lower overall industry capacity utilization.
Overcapacity not only indicates inefficient resource utilization but also intensifies competition within the industry. In order to compete for market share, companies may resort to price wars and other strategies, undoubtedly reducing product profitability and putting pressure on the long-term development of enterprises. Therefore, for the lithium iron phosphate industry, how to address overcapacity and improve capacity utilization is an important issue that needs to be resolved urgently.