NCM Material Companies Are Pushing To The LFP Track

Since 2021, a number of ternary materials and lithium cobalt oxide material companies, such as Huayou Cobalt, Long-term Lithium, Xiamen Tungsten New Energy, Dangsheng Technology, and Tianyuan Co., Ltd., have announced the construction of LFP cathode material projects. It is expected that other ternary material companies will enter the LFP material track in the later stage.

Behind the above-mentioned ternary material companies planning LFP material projects, it is the explosion of the new energy market and the rise of the energy storage market, which has led to a substantial increase in LFP battery shipments, which in turn generates strong demand for LFP cathode materials.

On the whole, the industrial logic of ternary material companies planning LFP material business is:

1. The TWh era opens up new opportunities for LFP material market growth.

Data show that in 2021, the global shipments of LFP cathode materials will be 485,000 tons, a year-on-year increase of 239%. It is estimated that by 2025, the global demand for LFP cathode materials will reach 2 million tons, reaching the volume and scale of small-scale chemical industry.

In the case of insufficient high-quality production capacity, ternary material companies actively deploy LFP cathode projects to seize the market, which is expected to become their new performance growth point.

2. Diversified layout strategy to enrich the company's cathode product matrix.

The new energy vehicle and energy storage market continues to grow, and the market demand for ternary batteries and LFP batteries grows at the same time, which means that battery companies that have both ternary battery and LFP battery production and supply capabilities will gain more development opportunities.

Due to the high concentration of the current power battery market, there is a high degree of customer overlap between ternary material companies and LFP material companies. Under this circumstance, ternary material companies actively deploy LFP materials, which will help them achieve a diversified layout, complement the cathode product line, and meet the diversified product needs of downstream customers, thereby enhancing their comprehensive competitiveness in the field of cathode materials.

3. The LFP material industry has a low concentration and has not yet fully formed an absolute competition pattern.

From 2016 to the first half of 2020, affected by the subsidy policy, the demand for LFP materials almost stopped growing, and the competition was fierce. Many LFP material companies stopped production or went bankrupt, and the market concentration was improved.

Beginning in the second half of 2020, the demand for LFP materials has increased significantly. LFP material companies that had previously stopped production resumed production, which led to the entry of new competitors, resulting in an increase in LFP material companies and a reduction in industry concentration.