Lithium iron phosphate (LFP) producers collectively maintain stable prices, indicating a strong willingness to raise prices.

From December 25th to 26th, four lithium iron phosphate (LFP) battery manufacturers—Hunan Yuneng, Wanrun New Energy, Defang Nano, and Anda Technology—successively announced maintenance and production reduction plans. The maintenance and production reduction periods are concentrated in January 2026, lasting for one month.

According to sources within the LFP battery industry, these four companies cover approximately 50% of the market share. Three of the companies that disclosed production reduction amounts correspond to a reduction of approximately 35%-50% in January. Their collective production cuts are expected to have a significant impact on the supply and demand situation in January.

LFP battery manufacturers are currently at a critical juncture in negotiating price increases with downstream battery manufacturers. An industry insider close to one of the aforementioned listed companies told the Shanghai Securities News that the production reduction plans have not yet received feedback from downstream manufacturers, "However, battery manufacturers may find it difficult to accept a corresponding 50% production reduction."

Four companies that reduced production control nearly half of the market share.

On the evening of December 25th, Hunan Yuneng announced that its capacity utilization rate has exceeded 100% since the beginning of the year. To maintain normal equipment operation and safe and stable production, and to ensure product quality, the company plans to conduct maintenance on some production lines. The maintenance will begin on January 1, 2026, and is expected to last for one month. This maintenance is expected to reduce the company's phosphate cathode material production by 15,000 to 35,000 tons, and is not expected to have a significant impact on the company's operating performance in 2026.

On the same evening, Wanrun New Energy announced that starting December 28, 2025, the company will conduct reduced-production maintenance on some production lines according to a pre-planned schedule, with the maintenance expected to last for one month. This reduced-production maintenance on some production lines is to ensure the continuous and stable operation of the lithium iron phosphate production lines. This maintenance is expected to reduce the company's lithium iron phosphate production by 5,000 to 20,000 tons, and is not expected to have a significant impact on the company's production and operation.

On December 26th, before the market opened, Defang Nano announced that it would conduct scheduled maintenance on some production lines and carry out technical upgrades on some equipment to bring production equipment to its optimal operating level. The maintenance period is expected to last one month, starting from January 1, 2026. It is not expected to have a significant impact on the company's operating results in 2026.

Affected by the news of three companies reducing production, the lithium iron phosphate sector surged on the 26th. Wanrun New Energy rose 7.56%, Hunan Yuneng rose 6.49%, Defang Nano rose 3.91%, Anda Technology rose 3.38%, Longpan Technology rose 2.14%, and Fulim Precision rose 1.57%.

On the evening of December 26th, Anda Technology also disclosed an announcement regarding the maintenance of some production lines. The company stated that since the fourth quarter of 2025, its lithium iron phosphate production lines have been operating beyond capacity. To ensure the safe, stable, and efficient operation of the lithium iron phosphate production lines, the company will conduct scheduled maintenance on some production lines starting from January 1, 2026, with the maintenance period expected to last one month. The maintenance is expected to reduce the company's lithium iron phosphate production by 3,000 to 5,000 tons, but it is not expected to have a significant impact on the company's production and operation.

According to analysis by GGII (Gaogong Lithium Battery Research Institute), Hunan Yuneng, Defang Nano, and Wanrun New Energy collectively account for nearly half of the lithium iron phosphate (LFP) market share. This short-term production cut will alter the current supply and demand dynamics of the industry.

According to the November LFP market share statistics released by Zeyan Consulting, the aforementioned three companies, along with Anda Technology, together hold nearly half of the market share.

The aforementioned lithium iron phosphate industry insider told the Shanghai Securities News that some non-listed lithium iron phosphate companies have also joined the production reduction plan.

Based on this estimate, this round of production cuts covers about half of the market, and perhaps more.

In terms of the magnitude of the production cuts, the three listed companies that disclosed their production reduction amounts saw reductions of approximately 35%-50% in January. A securities analyst tracked the situation and stated that Hunan Yuneng's production reduction plan is expected to reduce the company's lithium iron phosphate production by 15,000 to 35,000 tons, representing up to 35% of its capacity; Wanrun New Energy's production reduction plan is expected to reduce the company's lithium iron phosphate production by 5,000 to 20,000 tons, representing up to 50% of its capacity.

Rising raw material prices exacerbate losses;

lithium iron phosphate producers have a strong incentive to raise prices.

The timing of this industry-wide concentrated maintenance and production cuts coincides with a crucial period for lithium iron phosphate (LFP) companies to negotiate price increases with downstream battery manufacturers, demonstrating their strong motivation to maintain prices.

Regarding the reasons for the production cuts, the aforementioned LFP industry insider told the Shanghai Securities News reporter: "Currently, the LFP industry is still in the process of negotiating with major downstream battery customers. There are two main reasons for the production cuts: first, the soaring price of lithium carbonate has put significant pressure on operations; second, the base price continues to result in losses, and the prices of upstream phosphoric acid and iron phosphate continue to rise, making it difficult for customers to accept price increases and for operations to continue unsustainable."

Regarding the effectiveness of the production cuts in supporting prices, the insider stated that they have not yet received feedback from downstream companies, "However, battery companies may find it difficult to accept a corresponding 50% reduction in production."

The aforementioned securities analyst believes that the production stoppages are a bargaining chip for supporting prices, and supporting prices is an inevitable trend. From a supply and demand perspective, currently, leading LFP companies are operating at full capacity, and most second-tier companies are also operating at full capacity, but second-tier companies are still generally operating at a loss. On the cost side, the prices of lithium carbonate, phosphoric acid, monoammonium phosphate, and ferrous sulfate all increased in the fourth quarter, leading to increased operating pressure rather than decreased pressure. Regarding pricing, some major customers have experienced significant delays in bidding and negotiation. Given the current high utilization rate (an indicator of equipment's efficiency in creating value within its available time), the joint production cuts by lithium iron phosphate (LFP) manufacturers demonstrate a united stance, making price maintenance for LFP an inevitable trend.

Data shows that although market demand has clearly improved and enterprise operating rates have returned to a prosperous range, most LFP manufacturers are still operating at a loss.

According to data from the China Chemical and Physical Power Sources Industry Association, the average market price of LFP in November was 14,704.8 yuan/ton, while the industry cost ranged from 16,798.2 yuan/ton to 17,216.3 yuan/ton.