At the end of the year, the lithium iron phosphate (LFP) industry is experiencing a wave of concentrated production cuts and maintenance. Following announcements from several leading manufacturers, on the evening of December 29, Longpan Technology (603906) announced that its subsidiary, Changzhou Lithium Source, will undergo a one-month production reduction and maintenance starting January 1, 2026, due to overloaded production lines. The expected reduction in output is around 5,000 tons. The company stated that this maintenance will not significantly impact its 2026 operational performance.

Longpan Technology's production cut is not an isolated case. Looking back to December 25-26, several leading LFP companies, including Hunan Yuneng, Defang Nano, Wanrun New Energy, and Anda Technology, have already disclosed plans for production cuts and maintenance, all with a one-month duration, citing overloaded production lines as the core reason. These manufacturers collectively account for about half of the LFP industry's market share, and their concentrated production cuts will directly impact the short-term supply dynamics of the industry.

In terms of the scale of production cuts, the disclosed reductions vary among companies: Hunan Yuneng expects to reduce production of phosphate cathode materials by 15,000–35,000 tons; Wanrun New Energy anticipates a reduction of 5,000 to 20,000 tons; Anda Technology plans to cut production by 3,000–5,000 tons. Excluding Defang Nano, which did not specify the reduction amount, the cumulative production cut range for the four listed companies that have announced plans is 28,000 to 65,000 tons.

Industry insiders view the concentrated production cuts by leading companies as a clear signal to the industry. A lithium battery industry professional from Central China told reporters that this is a critical juncture for LFP companies and downstream battery manufacturers to finalize supply prices for 2026. The collective production cuts indicate a consensus within the industry to support prices, which will lead to a tightening of short-term market supply and is expected to drive up LFP prices.

Signs of price increases have already emerged in the market. Recent reports suggest that several LFP manufacturers have proposed price hikes to downstream customers, with increases ranging from 2,000 to 3,000 yuan per ton. According to research and analysis by Shanghai Nonferrous Metals, negotiations between LFP companies and downstream battery cell manufacturers are ongoing, with leading companies already entering the second round of talks. However, most small and medium-sized material manufacturers have yet to see their first-round price increase requests materialize.

Regarding the reasons behind this round of price hikes, Hunan Yuneng provided a clear explanation during recent institutional research, citing two main pressures: first, an imbalance between supply and demand for the company's products, with a particularly acute shortage of new products; second, rising costs due to increases in the prices of some raw materials. Hunan Yuneng also revealed that the company is actively engaged in business negotiations with customers and has made good progress.

The aforementioned lithium battery industry professional further pointed out that recent collective price increases in core raw materials for LFP, such as lithium carbonate, monoammonium phosphate, and ferrous sulfate, have exacerbated cost pressures on companies. The LFP industry as a whole is still operating at a loss, which provides strong motivation for price hikes. However, whether these price increases can be successfully implemented depends on market demand and the outcome of negotiations with downstream companies.

Data from the China Industrial Association of Power Sources confirms the industry's loss-making situation. In November 2025, excluding lithium carbonate costs and before taxes, the cost range for the LFP material industry was 16,800–17,200 yuan per ton, while the average market price for the product during the same period was only 14,700 yuan per ton, highlighting significant pressure to turn losses into profits.

Regarding the impact of production cuts and maintenance on the industry's annual development, industry insiders say there is no need for excessive concern. "January is typically the off-season for the lithium battery industry, and companies often rely on existing inventory and backup capacity to ensure order fulfillment. This concentrated maintenance will have limited impact on the completion of annual orders," the source added.

From:ChemNet