China's Lopal Tech Lands Record RMB 45 Billion LFP Order Amid EV and Energy Storage Surge

Lopal Tech has announced a landmark agreement, signalling a new phase of expansion for the lithium iron phosphate (LFP) industry. Following a supplementary agreement between its controlling subsidiary and three subsidiaries of CORNEX NEW ENERGY, the cumulative sales value is set to exceed RMB 45 billion, involving the supply of 1.3 million tons of LFP cathode materials. This record-setting order underscores the vigorous dynamics within the sector.

Driven by the dual engines of energy storage and new energy vehicles, the LFP industry is experiencing robust production, strong sales, and an accelerated pace of technological advancement. Industry analysts suggest this substantial procurement deal further validates the ongoing optimisation of the industry's supply-demand structure, laying a solid foundation for its development through 2026.

Explosive Demand and a Tightening Market

The first half of 2025 saw explosive growth in the LFP sector. Policy support has been significant, with China issuing over 2,470 energy storage-related policies, including 770 new policies introduced in 2024 alone.

Market data from the National Energy Administration confirms this momentum, showing China's new energy storage installations reached 94.91 GW/222 GWh in the first half of the year, a 29% increase from the end of 2024. Consequently, energy storage battery shipments surged 128% year-on-year to 265 GWh, a market dominated by LFP batteries.

In the new energy vehicle sector, China's power battery installations hit 84.1 GWh in October 2025, a 42.1% year-on-year increase. Installations of LFP batteries accounted for 67.5 GWh, growing 43.7% year-on-year and capturing an 80.3% market share. New energy vehicle penetration exceeded 45%, fuelled by policy incentives and growing consumer acceptance.

This demand surge has directly impacted upstream supply chains, leading to what industry insiders describe as 'order saturation and a tight capacity balance.' By July 2025, the industry's overall operating rate rebounded to 76.6%, an 11-percentage-point increase from the start of the year. Leading firms maintained capacity utilisation rates above 90%, with key players like Hunan Yuneng and Dynanonic operating at full capacity.

Simultaneously, industry inventories continued to decline, falling by 6,600 tons since the second quarter, further tightening the market. On pricing, after a decline early in the year due to expanded capacity, LFP cathode material prices stabilised and began rebounding in the third quarter. Guosheng Securities noted that with support from both demand and costs, the industry possesses clear momentum for subsequent price increases.

Technology and Expansion: The Shift to Value-Based Competition

Amid high growth, leading companies are accelerating technological upgrades and capacity expansion, with competition evolving from pure scale to a contest of value and technology.

Lopal Tech, the 2024 shipment leader, has been particularly active in 2025. On 15 September, its subsidiary LiBM (Asia-Pacific) signed an agreement to supply 157,500 metric tons of LFP material to CATL's overseas factories from Q2 2026 to 2031, with a total contract value exceeding RMB 6 billion. Furthermore, on 2 June, a production pricing agreement with Eve Energy Malaysia projected sales of 152,000 metric tons of materials between 2026 and 2030, with an expected contract value over RMB 5 billion.

Hunan Yuneng reported a 73.97% year-over-year surge in Q3 2025 revenue, with net profit soaring 235.31%. Dynanonic focused on technological iteration, achieving a 20%-30% shipment share for its fourth-generation high-density LFP products, while its fifth-generation products entered pilot-scale production. The company is also pursuing global markets through overseas joint ventures.

Elsewhere, Jiangxi Shenghua, a subsidiary of FULIN P.M., invested RMB 4 billion to build a 350,000-ton high-density LFP project. Companies like FENGY Co., Ltd. and MINMETALS NEW ENERGY MATERIALS are also ramping up high-end production capacity, making the industry's leading effect increasingly prominent.

Breaking the Deadlock and Countering Competition

Technological upgrades are now key to breaking industry bottlenecks. Zhou Bo, Secretary-General of the Lithium Iron Phosphate Materials Branch of the China Chemical and Physical Power Source Industry Association, stated that demand for high-performance products like lithium iron manganese phosphate is robust, commanding significant price premiums.

However, he noted that many companies face slow progress in building next-generation production lines due to financial pressures. 'Leading companies now ship over 30% of fourth-generation high-density products, yet many peers can't even upgrade to third-generation production lines,' creating a structural supply-demand imbalance.

Looking ahead to 2026, the LFP industry is expected to maintain high growth, with demand expansion, technological advancement, and global expansion as core trends.

GGII forecasts global energy storage battery shipments will reach 580 GWh in 2025, growing over 75%, with sustained high growth exceeding 50% projected for 2026. In the new energy vehicle sector, as penetration rates rise and high-voltage fast-charging models spread, LFP's cost-performance advantages will strengthen, with vehicle installation growth expected to remain above 40%. Driven by this dual demand, demand for LFP cathode materials is projected to exceed 12 million tons by 2026, with industry capacity utilisation rates rising further to over 85%. The supply-demand gap for high-end products will continue to widen.

Technologically, high packing density, extended lifespan, and cost reduction are core R&D directions. By 2026, high-density LFP materials are projected to increase their market share from the current 30% to 50%. The double-grinding and double-calcination process will become mainstream, enabling battery energy densities to exceed 200 Wh/kg. On costs, optimised supply of phosphate and lithium resources alongside improved recycling systems are expected to drive steady cost declines.

Global expansion will become a key battleground. Overseas energy storage demand is growing rapidly, with Europe and Southeast Asia as investment hotspots. Companies like Hunan Yuneng, Lopal Tech., and Dynanonic have already established overseas production capacity. By 2026, the share of overseas production is projected to rise from under 5% to over 10%.

Cross-Industry Entry: A Landscape of Opportunity and Challenge

The sector's momentum is attracting entries from major corporations in related fields, primarily from phosphate chemicals and coal chemicals. Companies like Xingfa Group and Yuntianhua leverage phosphate ore resources to expand into LFP, giving them cost advantages in the mid-to-low-end market. However, high technical barriers make it difficult for them to compete in the high-end segment short-term. No large enterprises from unrelated industries have yet entered the market on a large scale.

For potential entrants, the market presents both opportunities and challenges. Opportunities include sustained high demand, strong policy support, and gradually improving profit margins. Challenges, however, are significant:

1. High Technical Barriers: Producing high-density LFP involves multiple complex steps, requiring substantial long-term R&D investment.

2. Substantial Capital Investment: Building a 100,000-ton high-end LFP project demands over RMB 5 billion, with a payback period of 3–5 years.

3. Supply Chain Barriers: Leading battery manufacturers prefer long-term agreements with established suppliers, making it difficult for new players to secure stable orders.

4. Risk of Oversupply: Current industry-planned capacity exceeds 20 million tons. If demand falls short, mid-to-low-end capacity could face severe imbalances.

Overall, the LFP industry is not universally suitable for all players. Experts suggest that companies with resource advantages, technological reserves, or strong capital should selectively enter high-end segments or niche markets. Small and medium-sized enterprises lacking core competitiveness are advised to proceed cautiously to avoid being caught in low-end capacity price wars.