After two years of low prices, the lithium iron phosphate (LFP) industry experienced a strong recovery in the second half of 2025. Data shows that as of January 27, 2026, the price of energy storage-grade LFP materials surged from RMB 30,000 per ton in June 2025 to RMB 59,000 per ton, a near-doubling increase of nearly RMB 30,000 per ton within six months. The industry widely believes this is not a short-term fluctuation but a systemic rebound driven by multiple factors, with the profit inflection point having arrived and the positive momentum expected to continue until the fourth quarter of 2026.

Price Bottoming Out and Collective Price Hike Wave Begins

As a core raw material for lithium batteries, LFP prices have experienced roller-coaster volatility. In 2023, the industry rapidly shifted from supply shortage to oversupply, with prices plummeting from RMB 166,000 per ton at the beginning of the year to RMB 46,000 per ton by year-end. Prices continued to fluctuate downward over the following year, hitting a low of RMB 34,000 per ton in August 2025—a drop of over 80%. The industry fell into a 36-month period of deep losses, with the average debt ratio climbing to 67%, making operations extremely difficult for enterprises.

The turning point began in the fourth quarter of 2025, as LFP prices re-entered an upward trajectory, leading major players to initiate a collective price hike wave. Leading companies such as Hunan Yuneng and Anda Technology announced that, effective January 1, 2026, processing fees for their full range of LFP products would increase by RMB 3,000 per ton (pre-tax). Data from the China Industrial Association of Power Sources (CIAPS) shows that the industry's capacity utilization rate reached 78.1% in November 2025, a year-on-year increase of 10.9 percentage points, with leading enterprises operating at full or even overcapacity and maintaining low inventory levels.

Triple-Driver Recovery and Industry Structure Optimization

Industry analysis indicates that this round of price recovery is driven by a combination of cost, demand, and policy factors, rather than being a short-term market phenomenon.

• On the cost side: Prices of upstream raw materials such as lithium carbonate, sulfur, and sulfuric acid have risen across the board. Lithium carbonate prices increased from less than RMB 60,000 per ton in June 2025 to over RMB 130,000 per ton by year-end. By mid-January 2026, the year-to-date increase for the main futures contract exceeded 25%, directly pushing up LFP production costs.
• On the demand side: A "dual-wheel explosion" trend is evident, with continuous expansion in both the new energy vehicle (NEV) and energy storage markets. In 2025, the penetration rate of domestic NEVs broke through 45%-50%, and LFP's share in power battery installations reached as high as 81.5%. Global energy storage battery shipments reached 640 GWh, a year-on-year increase of 82.9%, with LFP's share in the energy storage sector reaching an astounding 99.9%. Under this supply-demand imbalance, structural shortages of high-end products like those with high compaction density are pronounced, commanding a premium of RMB 2,000-3,000 per ton and being in extremely short supply ("hard to find a single piece of goods").
• On the policy front: Industry association measures against "internal competition" have safeguarded price recovery. In November 2025, CIAPS delineated the average cost range for the LFP industry at RMB 15,714.8 - 16,439.3 per ton (pre-tax), explicitly prohibiting low-price dumping and promoting a shift from "scale competition" to "quality competition."

Strong Performance from Leaders, Single-Quarter Net Profit Soars Over 500%

The benefits of the industry recovery have already translated into corporate profitability, with Hunan Yuneng's performance serving as the strongest evidence. On the evening of January 19, the company released its 2025 annual performance forecast, projecting full-year net profit attributable to shareholders of RMB 1.15 billion to RMB 1.4 billion, a year-on-year increase of 93.75% to 135.87%. Adjusted net profit is forecasted at RMB 1.1 billion to RMB 1.35 billion, up 92.88% to 136.72% year-on-year.

Even more impressive is the explosive growth in the fourth quarter. Based on the net profit attributable to shareholders of RMB 645 million for the first three quarters, Hunan Yuneng's Q4 2025 net profit attributable to shareholders is estimated in the range of RMB 505 million to RMB 755 million, with a median of approximately RMB 630 million. This represents a year-on-year surge of over 500% and an 85% increase quarter-on-quarter, with single-quarter profit nearly equaling the sum of the first three quarters.

Regarding the significant performance increase, Hunan Yuneng stated in its announcement that it benefited from the rapid development of the NEV and energy storage markets, growth in demand for lithium battery cathode materials, and the emergence of structural supply shortages. The company's sales volume of phosphate cathode materials increased substantially. Furthermore, the proportion of its high-end products has risen to around 40%, and coupled with its integrated industry chain layout, this has further optimized its profit structure. As a core supplier to CATL and BYD, its customer resource advantages are significant, with combined sales revenue to these two giants accounting for at least 58.44% over the past three years.

Positive Momentum Continues, Structural Opportunities Highlighted

It's not just Hunan Yuneng. As of January 26, 2026, several representative companies in the lithium battery segment have released annual performance forecasts, all indicating positive trends—either turning losses into profits or experiencing substantial profit growth—confirming the overall industry recovery.

Looking ahead, industry professionals are generally optimistic about the continuation of positive momentum. On the demand side, global LFP cathode material shipments are projected to reach 5.25 million tons in 2026, a 36% year-on-year increase. The growth rate of global energy storage installations is expected to remain at 50%-60%. The adoption of fast-charging batteries and demand for AI data center (AIDC) energy storage will further support demand for high-end products. On the supply side, the pace of industry capacity expansion has slowed, with the year-on-year growth rate of "fixed assets + construction in progress" in 2025 being only 7.5%. Low-end capacity is being phased out faster, while the scarcity of high-end capacity continues to become more pronounced.

Analysts point out that with the continuous improvement in supply-demand structure, coupled with clear trends towards product premiumization and overseas expansion, leading enterprises are expected to achieve超额利润 (excess profits). The LFP industry has emerged from its long-term loss predicament and entered a new stage of healthy and sustainable development. However, potential risks such as ineffective cost transmission and博弈 in capacity expansion仍需警惕 (still need to be vigilant), and the path to industry recovery will still need to advance amidst fluctuations.