Chinese producers of lithium iron phosphate (LFP) battery materials are raising prices or planning to do so as strong demand from the electric vehicle and energy storage sectors tightens supply, according to a report by Shanghai Securities News.
Several major LFP manufacturers have recently proposed price increases, with one company planning to lift the processing fee across its entire LFP product range by 3,000 yuan ($420) per tonne from Jan. 1, 2026, the report said. The company added in its price adjustment notice that product pricing could be renegotiated if there are significant fluctuations in market conditions or raw material costs.
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Another major LFP producer has already implemented a similar 3,000 yuan per tonne processing fee increase from Nov. 1, 2025, according to the same report. Contracts signed before that date will continue to be honoured at previous prices.
The two companies were not named in the report. LFP is a core cathode material used in batteries for electric vehicles and stationary energy storage systems. The latest pricing moves are being driven by rising material costs and recent supply constraints, the report said.
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Benefiting from surging demand for both EVs and large-scale energy storage projects, effective capacity utilisation at LFP plants has now climbed above 95%, with some leading producers operating at full capacity, the report added. An industry insider quoted by the publication said the proposed price hikes represent “reasonable demands” from producers, though the final outcome will depend on negotiations with customers.
Spot prices for LFP materials remain elevated. As of Dec. 1, LFP material for power batteries was priced at 39,950 yuan per tonne in China, while material used for energy storage systems stood at 36,950 yuan per tonne, according to the report.
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The pricing pressure at the upstream level comes as China’s battery supply chain continues to expand rapidly to meet domestic and overseas demand for affordable lithium batteries, where LFP chemistry plays a dominant role due to its cost advantage and durability.