In 2024, the cathode material market experienced a supply-demand imbalance. Price wars among major automakers led to a decline in the use of ternary lithium batteries, while demand for lithium iron phosphate (LFP) materials surged. As a result, LFP became the undisputed king of volume. The market trends—whether rising, falling, or persisting—have prompted some companies to brace for a decade of potential losses. ਐਪਿਕ ਪਾਊਡਰਦੇ ਜੈੱਟ ਮਿੱਲ machines are designed for robust and continuous operation. Our ਜੈੱਟ ਮਿੱਲ machines can efficiently grind cathode material to a target fineness of 3-45 microns. This product is widely used in the manufacturing of industrial seals, friction materials, and as a reinforcing agent in composite materials, thanks to its superior purity and morphology.
The year 2024 marked the beginning of a new round of industrial upgrades and eliminations. So, where is the market headed in 2025?
Ternary Materials
The performance of ternary materials in 2024 was initially concerning but later stabilized. In the first half of the year, the industry saw a mix of profits and losses. However, as prices recovered in the second half, losses gradually ceased, and profits began to return.
Data shows that from January to November 2024, lithium battery capacity reached 473 GWh, a 39% year-on-year increase. The surge in popularity was largely driven by LFP, while the market share of ternary lithium batteries declined.
As demand growth slowed, ternary cathode material prices stagnated, though signs of stabilization emerged in the second half. While ternary materials are suitable for mass production, new production capacity remains limited. Prices from existing companies are low due to cost pressures and industry consolidation. With inexpensive new energy vehicles flooding the market, ternary lithium batteries struggle to generate profits.
Lithium Iron Phosphate
LFP currently enjoys strong demand and supply, outperforming ternary materials. The introduction of heat pump air conditioners has improved the low-temperature performance of LFP batteries. Advancements in battery technology and thermal management systems have further increased the adoption of LFP in electric vehicles, enhancing low-temperature durability and expanding its use in more models.
In the first three quarters of 2024, rising lithium prices forced the LFP industry to restock with cheaper inventory. As production schedules and operational rates in the lithium battery industry gradually recovered, LFP production and capacity significantly increased compared to the previous year. However, in the first three quarters of 2024, LFP battery production doubled the installed capacity, exceeding overall market demand. This temporal mismatch between supply and demand has left the industry deeply entangled in inventory adjustments, facing severe pressure to reduce costs.
In 2024, LFP production capacity reached 5.2 million tons, while actual production was only 2.4 million tons, resulting in a capacity utilization rate below 50%.
LFP has become an exceptionally complex segment of the lithium battery industry. Overcapacity has cast a long shadow over product prices and corporate profits.
Recent Developments in LFP Materials
Despite its popularity, the LFP industry faces challenges. Some high-end LFP products are currently in short supply, leading to near-full production and price increases for certain companies. This is primarily due to growing demand for product compaction and process upgrades, which have triggered an artificial price surge.
LFP materials can be sintered twice. To increase energy density, manufacturers are upgrading from single sintering to double sintering, which enhances material compaction density. However, this significantly increases costs and line utilization. Originally, production capacity was reduced by half, but double sintering adds an extra cost of 2,000 RMB per ton of material. As a result, LFP material prices appear to have risen by 1,000–2,000 RMB, though this increase fails to offset the higher costs of double sintering.
While the industry appears to be recovering and product prices seem to be rising, new technological upgrades and price reductions are quietly underway. This trend will likely shape the landscape in 2025. Large companies may face dilemmas, needing to invest more, expand production, and upgrade products while struggling to turn a profit. The elimination game is intensifying.
Two Extremes: High-End Performance vs. Low-End Cost Efficiency
The lithium battery cathode material industry stands at a crossroads. While ternary materials offer high performance, their costs remain elevated. As a result, developers are pursuing two extremes: “high-end, high-performance” and “low-end, cost-effective” materials.
One direction focuses on high-performance products, such as high-nickel semi-solid batteries, full-wire large cylindrical batteries, advanced tools, electric supercars, and flying cars.
The other direction emphasizes cost efficiency, developing lithium iron manganese phosphate materials and exploring new frontiers based on manganese. Once mass-produced, lithium iron manganese phosphate is expected to become the ideal choice for EV batteries, combining the advantages of ternary and LFP batteries with minimal drawbacks.
For LFP, both manufacturing and cost efficiency need improvement. With material-level optimization nearing its limits, the focus has shifted to process optimization. Companies are now aiming to optimize equipment and processes, using double sintering to improve material utilization. Another approach involves replacing lithium carbonate with lithium dihydrogen phosphate to reduce energy consumption and emissions.
Market Outlook for Lithium Battery Cathode Materials in 2025
Recent surveys indicate strong demand for price increases next year. Cathode material plants are seeking a raise of about 3,000 RMB per ton, while battery plants are likely to accept only half of that—around 1,500 RMB per ton.
Preliminary results show that lithium carbonate plants have reduced or discontinued long-term discounts for the next year. Meanwhile, prices of LFP raw materials are rising, and phosphate plants are clearly supporting price hikes. This suggests that LFP cathode material prices are poised to increase, with the key question being the final extent of the rise.
Detailed analysis reveals that products with compaction densities of 2.45 and 2.50 dominate the market share. Their homogeneity and low technical barriers make it difficult to reverse the trend of losses.
However, products with higher compaction densities (above 2.55) hold a smaller market share. Their high technical barriers and superior energy density will drive demand growth. Manufacturers producing high-compaction cathode materials will gain negotiating power and are likely to turn losses into profits in the second half of 2025.
The LFP market is expected to stabilize and grow in 2025. However, the Spring Festival holiday and high inventory levels from 2024 may weaken supply and demand in early 2025. The second half of the year is anticipated to show stronger performance.
ਐਪਿਕ ਪਾਊਡਰ
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