According to Mysteel OilChem, the weekly cost of iron phosphate reached Yuan 11,767.40 per tonne recently, with the average weekly profit standing at Yuan -1,267.40 per tonne. Against the background of persistent losses, leading companies are accelerating upstream integration into phosphorus chemicals to secure supply and reduce costs.
There are two main approaches to upstream expansion: in-house development and partnership. For instance, Hunan Yuneng has moved into phosphorus mining, while Zhongwei Co.'s subsidiary obtained a mining license for the Xinchang phosphorus mine in Guizhou. On the other hand, companies like Brunp and Yihua have established joint ventures to leverage phosphorus resources. These moves -whether by LFP cathode and battery makers moving upstream or traditional phosphorus producers expanding downstream - are driving the formation of an integrated industrial chain from phosphorus ore to purified phosphoric acid / monoammonium phosphate, and then iron phosphate and LFP cathode.
This trend also highlights a key challenge: as LFP and its precursor face increasingly narrow downstream applications, competition is likely to intensify between specialized phosphorus chemical firms and integrated players.
Compared to lithium resources, phosphorus offers lower costs and more stable pricing. Effective upstream integration can help LFP producers mitigate cost pressures, especially crucial as outsourcing needs shrink and technology iteration in LFP batteries accelerates. Controlling upstream supply not only cuts costs but also ensures stability.
However, entering phosphorus mining and processing requires substantial capital and technical expertise, including challenges in mineral processing, phosphoric acid production, and environmental compliance. Longer supply chains also increase pressure on cash flow. While upstream integration aims to reduce costs, it may bring unexpected challenges. In any case, going it alone appears increasingly risky in the current climate.
Concerning LFP technology advancing, companies like Dynanonic have launched fourth-generation high-density LFP products, which now account for 20%–30% of its product mix. Its fifth-generation LFP material, which is suitable for both EV and energy storage applications, has entered pilot production.
Meanwhile, Pengbo New Materials' 100,000-tonen LFP project located in Shanxi is nearing operation. With a first-phase investment of Yuan 1.85 billion, the facility will produce fifth-generation high-density LFP based on an iron oxalate process, with trial production set for mid-September and batch delivery in October.
Written by Aggie Hu, huchenying@mysteel.com
