SunSirs: Iron Phosphate Market Remained Largely Stable with Minor Fluctuations in August

Price trends

According to data monitored by SunSirs, the iron phosphate market remained largely stable with minor fluctuations in August, seeing a slight price increase. The average market price was 16,125 RMB/ton at the beginning of the month and 16,175 RMB/ton on August 28, representing a rise of 0.31%.

Market analysis

Supply side: Operating at full capacity overall, with limited room for increased output and a shortage of spot supply.

The operating rate of mainstream domestic iron phosphate production facilities remains high, with most plants running near full capacity and no large-scale new capacity coming online in the short term; capacity expansion projects have long lead times, so no significant additional volume entered the market in August.

Companies hold virtually zero inventory; output is largely delivered directly to long-term contract customers, leaving very little spot supply for the open market. Integrated LFP producers prioritize internal consumption, further constricting the volume available for external sales.

Divergence: Integrated producers that source their own phosphorus and iron face less pressure, whereas iron phosphate plants relying entirely on purchased raw materials face significant cost pressures, leading some to pace their order intake.

Demand side: Dual growth in power batteries and energy storage; a "rush to stock up" effect observed in August.

Iron phosphate is used almost exclusively for the production of lithium iron phosphate (LFP) cathode materials.

Energy storage batteries: The primary source of demand growth. A surge in large-scale overseas energy storage orders and increased cell production schedules in August have made energy storage batteries the leading source of demand—surpassing power batteries—thereby driving demand for LFP materials and, consequently, iron phosphate.

Power batteries: Domestic production schedules for new energy vehicles remain steady, with a rising share of LFP batteries in commercial vehicles, resulting in stable demand.

Policy-driven disruption: A 2% consumption tax on lithium batteries took effect on September 1. In late August, battery cell and material manufacturers rushed to ship products and issue invoices, driving a temporary wave of restocking in mid-to-late August that further depleted spot supplies of iron phosphate.

Structural imbalance: Demand for high-end, high-tap-density lithium iron phosphate (LFP) surged, leading to a particularly tight supply of the high-quality iron phosphate required for its production; meanwhile, demand for low-end products remained weak.

Market Outlook:

Analysts at SunSirs believe that in September, with continued support from the cost side and steady underlying demand from end-users, the iron phosphate market will primarily fluctuate at high levels, lacking the momentum for a sustained, sharp unilateral rise.

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