As a sector with poor pricing power across the LFP lithium-ion battery industry chain, the iron phosphate players have been challenged by both high cost and soft demand entering 2025, despite the long-term bullish demand outlook in the electric vehicle (EV) and energy storage markets.
According to Mysteel's data, the prices of iron phosphate have dropped from Yuan 15,000–18,000/tonne at the beginning of 2023 to Yuan 10,000–11,500/tonne in 2025, falling below the cash cost of some producers and severely eroding profitability.
Currently, the mainstream production methods include ammonium process, iron process, and sodium process. Compared to the ammonium process, the raw material cost for the iron and sodium processes have been relatively more stable. Producers relying on traditional ammonium-based technology have faced cost pressures. That is, when industrial ammonium and phosphate prices rise, the production costs can even exceed Yuan 12,000/tonne, posing significant challenges to cost control.
In addition to cost pressure, the iron phosphate market is also experiencing overcapacity thanks to the rapid growth of the end-market in the previous years.
Mysteel survey showed that China's iron phosphate capacity reported approximately 4.34 million tonnes/year as of July 2025, while the production in the first half of 2025 added up to 1.31 million tonnes, suggesting an average capacity utilization rate of around 60%.
Source: Mysteel
Specially, the top-tier producers maintained active production thanks to captive raw material sources, outstanding cost control, and binding clients, while the market itself sees growing demand and intensifying competition.
Despite an important precursor for lithium iron phosphate (LFP) cathode, the iron phosphate sector has long been weak in terms of pricing power, while the downstream LFP cathode sector enjoys a higher market concentration, putting them at the upper hand. In this case, the rising cost of iron phosphate could hardly be translated into price hike of the finished product.
On the other hand, the LFP cathode factories are in the transition to high-end products like third and fourth-generation LFP with high compaction density, which allows better profitability. While the transition course is slow, the demand unleash lags further behind, making the competitions in the iron phosphate market more intensive.
Previously, companies such as Huiyun Titanium Industry, Jinpu Titanium Industry, LB Group, and CNNC Titanium Dioxide successively announced the termination or postponement of their LFP investment projects. Given that current market demand is lower than expected and the EV sector faces cost-reduction pressures, the pricing of iron phosphate remains relatively transparent. Fluctuations in the costs of raw materials like phosphoric acid and industrial ammonium are difficult to pass on to iron phosphate prices, constrained by LFP fabrication charges.
On the other hand, the downstream battery cell manufacturers are controlling costs and squeezing profit margins upstream. Based on disclosed data from iron phosphate companies mulling over business shift, most are struggling to achieve profitable operations. As a result, these firms are adjusting their plans in response to market conditions and their own circumstances.
Despite the headwinds, the companies securing advantages over phosphate resources have been active in expansion, making the market more concentrated via integration.
Source: Public news
Written by Aggie Hu, huchenying@mysteel.com
