In May 2026, China’s lithium iron phosphate (LFP) battery industry witnessed a full-scale market recovery, featuring four major development characteristics: rising prices, increased production scheduling, booming energy storage demand and continuous technological upgrading, with the industrial chain prosperity keeping rising steadily.
In terms of market prices, the quotations of power-type and energy storage-type LFP materials have maintained a strong upward trend recently. The mainstream quotation of power-grade LFP has reached 61,700 – 68,100 RMB per ton, with a maximum daily price increase of 2,500 RMB per ton. The upstream iron phosphate raw materials also rose simultaneously, and the industry operating rate remained at a high level. At present, the overall operating rate of the iron phosphate sector has reached 85%, and spot supplies are basically pre-locked by downstream manufacturers, forming a tight supply-demand balance in the short term.
On the demand side, the energy storage market has become the core growth driver. The overall lithium battery production scheduling hit a new high in May, and the proportion of energy storage cell production scheduling rose to 42.3%. Meanwhile, downstream demands including new energy vehicle exports, construction machinery, residential energy storage and low-speed electric vehicles have been released intensively, driving both year-on-year and month-on-month output growth of upstream and downstream products in the industrial chain such as LFP cathode materials, anode materials and electrolytes.
Industrial capacity expansion and technological iteration advance simultaneously. Major investment projects for LFP cathode materials and iron phosphate raw materials have been launched intensively across the country. Leading enterprises have accelerated the launch of the fifth-generation high-compaction LFP products, with continuous breakthroughs in core indicators such as cycle life, energy density and compaction density.
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The industry pattern is further differentiated, showing a situation of oversupply of low-end capacity and shortage of high-end high-compaction products. High-end orders have been scheduled till 2027, and enterprises with technological advantages and integrated production capacity stand out prominently in market competitiveness.
Industry institutions analyzed that as the release of new production capacity lags behind demand recovery, the supply shortage pattern of the LFP industry is expected to continue in the second half of the year. The energy storage and overseas markets will underpin the long-term steady development of the industry, and technological upgrading and high-end transformation will become the core development focus for enterprises.
