Recently, Longpan Technology unveiled a major investment plan, proposing to invest up to 20 billion yuan to construct a 240,000-ton high-compaction lithium iron phosphate (LFP) production base. The project is scheduled to commence construction in the first quarter of 2026 and be completed and operational by the third quarter, with a construction period of just two quarters, setting a new record for the progress of similar industry projects. Simultaneously, the company's controlling subsidiary, Changzhou Lithium Source, recently announced a one-month production reduction and maintenance shutdown in January 2026, expected to reduce output by 5,000 tons. This contradictory move of simultaneous capacity expansion and reduction, against the backdrop of widespread losses in the LFP industry, has drawn significant market attention to Longpan Technology's strategic choices.

According to Longpan Technology's announcement, the new project will be implemented by its wholly-owned subsidiary, Lithium Source (Jiangsu) Technology Co., Ltd., and will be carried out in two phases. The first phase has a planned annual capacity of 120,000 tons, and Changzhou Lithium Source has committed that the capacity after the first phase's completion will not be lower than this standard. Additionally, the company plans to upgrade the capacity of its existing project from 62,500 tons/year to 100,000 tons/year, indicating a significant expansion effort.

Notably, the interval from project initiation to completion and operation is only two quarters, a pace rare within the industry. Industry insiders generally believe that such a tight schedule imposes extremely high demands on project construction, equipment commissioning, and personnel preparation.

In stark contrast to the aggressive expansion, Longpan Technology recently implemented production cuts. On December 29, 2025, the company announced that due to long-term overloading of production lines, Changzhou Lithium Source would reduce production and conduct maintenance on some lines for one month starting January 1, 2026, with an estimated reduction of approximately 5,000 tons of LFP output. Longpan Technology stated that this maintenance would not significantly impact its 2026 operating performance.

According to the reporter's review, Longpan Technology's production cut is not an isolated case. Between December 25 and 29, 2025, four leading LFP companies—Hunan Yuneng, Wanrun New Energy, Dynanonic, and Anda Technology—successively disclosed plans for maintenance and production cuts, all concentrated in January 2026. This collective reduction by leading firms reflects an industry consensus to support prices.

Behind these capacity adjustments lies the persistent profitability challenges of the LFP industry. Data from the China Industrial Association of Power Sources shows that in November 2025, the average market price of LFP was only 14,704.8 yuan/ton, while the industry cost range was between 16,798.2 yuan/ton and 17,216.3 yuan/ton, resulting in a per-ton loss of 2,000 to 2,500 yuan, with the price gap further widening compared to October.

"The LFP industry is the 'sandwich layer' of the industrial chain, squeezed from both ends," an industry insider frankly told the reporter. Rising costs from upstream raw materials like lithium carbonate and monoammonium phosphate, coupled with the strong bargaining power of downstream battery manufacturers, have continuously compressed the industry's profit margins.

Amid industry difficulties, Longpan Technology's operational pressures are also evident. Financial data shows the company has reported losses in its interim reports for three consecutive years. From the first half of 2023 to the first half of 2025, losses were 654 million yuan, 221 million yuan, and 85 million yuan, respectively. Although the loss magnitude has been narrowing, the company has not yet achieved profitability. For the first three quarters of 2025, the company's non-GAAP net profit was -172 million yuan, with pressure on reported losses only alleviated by non-recurring gains and losses such as government subsidies.

Pressure on the capital front is more pronounced. The 2025 interim report showed Longpan Technology's interest-bearing debt reached 9.576 billion yuan, a year-on-year increase of 6.90%, with an interest-bearing debt-to-asset ratio of 52.89%. By the end of Q3 2025, the company's overall asset-liability ratio further climbed to 79.24%, up from 78.41% at the interim report. Although the company obtained 1.846 billion yuan in cash flow from financing activities through capital absorption in the first half, covering over 70% of its short-term borrowings with its monetary fund balance, the large-scale capacity expansion will still test its funding chain.

Against the backdrop of widespread industry losses, the core logic behind Longpan Technology's counter-cyclical expansion lies in betting on the product upgrade opportunity presented by high-compaction LFP. Shanghai Ganglian analysis points out that while processing fees for current third-generation LFP products are under pressure, high-compaction products maintain a premium. The processing fee per ton for leading companies' fourth-generation high-compaction products is 1,000–3,000 yuan/ton higher than for standard products. It is reported that Longpan Technology's fourth-generation high-compaction LFP has passed certification by leading customers and is being supplied stably. The company views this as key to breaking through the industry's困境.

Longpan Technology's expansion choice is not an isolated case; a capacity race in the high-compaction LFP field has quietly begun. Fulin Precision announced on October 29 that its subsidiary plans to invest 4 billion yuan to build a 350,000-ton new high-compaction density LFP project. On December 29, CATL's controlled subsidiary, Brunp Recycling, officially commenced production of its 450,000-ton/year new-generation LFP project. Chemical giant Wanhua Chemical is making a major push, having signed a 650,000-ton project in Laizhou, Shandong, and with plans for a Sichuan base, bringing its total planned capacity to over 1.25 million tons.

Regarding the industry's future trajectory, market opinions are clearly divided. A recent CITIC Securities research report suggests that the profitability of the LFP industry may be approaching a cyclical inflection point, forecasting global LFP cathode material shipments to reach 5.25 million tons in 2026, a 36% year-on-year increase. Zeyan Consulting data shows that from January to November 2025, China's total LFP output was 3.48 million tons, a 57.9% year-on-year increase, with a record single-month output of 417,000 tons in November. On the downstream demand side, from January to October 2025, China's cumulative installation volume of LFP batteries was 470.2 GWh, accounting for 81.3% of total installations and representing a 59.7% year-on-year growth. The energy storage sector also showed strong performance, with lithium battery shipments for energy storage in the first three quarters already exceeding the total for all of 2024 by 30%.

A Longpan Technology representative stated in August: "From the company's perspective, turning a profit in the second half of the year is not a problem. From the perspective of the LFP industry, it might achieve break-even or a slight profit in the second half, but turning a profit for the full year still faces pressure."

Currently, automated production lines within the company's factory continue to operate, with workers focused on monitoring production data for the fourth-generation high-compaction LFP. Meanwhile, within the industrial park, preparations for production line maintenance and expansion site construction are progressing simultaneously. Under the industry's structural pattern of "excess low-end capacity, tight high-end supply," whether Longpan Technology's 20-billion-yuan bet will yield returns remains to be tested by the market.