Guosheng Securities: The association has released a development initiative for lithium iron phosphate to continuously promote price stability in the industry

According to the Zhitong Finance APP, Guosheng Securities released a research report stating that due to the significant expansion of industry capacity and the drastic fluctuations in lithium resource prices, the capacity utilization rate of the lithium iron phosphate industry is relatively low, and most companies continue to report losses. The China Chemical and Physical Power Industry Association has issued a draft proposal titled "Proposal for Maintaining the Healthy and Orderly Development of the Lithium Iron Phosphate Material Industry (Draft for Comments)." This draft proposal is a concrete practice in response to national policies against involution and is helpful in stabilizing the prices of lithium iron phosphate cathodes and promoting the recovery of corporate profits. The main points of Guosheng Securities are as follows: On August 27, the association released a draft proposal for maintaining the healthy development of lithium iron phosphate. In recent years, with the rapid development of the new energy vehicle and energy storage industries, the demand for lithium iron phosphate, as a key cathode material, has continued to rise. By the first half of 2025, China's lithium iron phosphate material capacity accounted for over 95% of the global total capacity. However, due to the significant expansion of industry capacity and the drastic fluctuations in lithium resource prices, the capacity utilization rate of the lithium iron phosphate industry is relatively low, and most companies continue to report losses. Therefore, to promote the sustainable development of the industry, the China Chemical and Physical Power Industry Association has released the "Proposal for Maintaining the Healthy and Orderly Development of the Lithium Iron Phosphate Material Industry (Draft for Comments)." The proposal includes four recommendations: Firmly resist malicious price competition and maintain fair market order: Any form of sales below cost price and abuse of market dominance should be firmly eliminated. The association advocates the establishment of a "lithium iron phosphate product cost price index" and entrusts qualified third-party institutions to regularly conduct cost surveys and publish index data to provide objective references for reasonable pricing by enterprises. Build a healthy supply chain ecosystem and collaboratively respond to fluctuations in the raw materials market: The drastic fluctuations in the prices of key raw materials such as lithium and phosphorus have significantly impacted the stability of the industry chain. The proposal encourages upstream and downstream enterprises to strengthen strategic cooperation by signing long-term agreements and referencing futures market prices to build a healthy supply chain ecosystem and enhance the risk resistance capability of the entire chain. Strengthen capacity self-discipline management and improve industry access mechanisms: Implement dynamic management of capacity utilization rates, meaning that if the capacity utilization rate is below 70% in a given year, enterprises should proactively postpone plans for new capacity investments. If the overall capacity utilization rate is below 60%, all industry enterprises should jointly postpone a new round of capacity expansion; promote the establishment of high-standard industry access thresholds based on the Ministry of Industry and Information Technology's "Regulatory Conditions for the Lithium Battery Industry (2024 Edition)" to accelerate the elimination of inefficient capacity and optimize the industry structure. Accelerate the elimination of inefficient capacity and optimize the industry structure: Call on enterprises to shift their competitive focus from price to comprehensive improvements in technology research and development, product performance, manufacturing processes, and service systems. In the first half of 2025, the proportion of lithium iron phosphate vehicles in China exceeded 81%, with shipments increasing by 67% year-on-year. According to SMM lithium battery data, in the first half of 2025, the cumulative installation volume of lithium iron phosphate batteries in China reached 244.0 GWh, accounting for 81.4% of the total installation volume, with a cumulative year-on-year growth of 73.0%. The shipment of lithium iron phosphate cathodes in China reached 1.632 million tons, a year-on-year increase of 66.6%. Among them, in the first half of the year, Hunan Yuneng ranked first in the market with a 30% share and a production volume of 400,000 tons WanRun New Energy, Dynanonic, YouShan Technology, FuLin ShengHua, and Changzhou Lithium Source have a market share between 5% and 10%, placing them in the second tier. Additionally, in terms of production growth rate, in the first half of the year, among the TOP 10 companies, Anda Technology and Easpring had the highest growth rates, both exceeding 200%; YouShan Technology, FuLin ShengHua, and GuoXuan High-Tech all exceeded 100%; while Yuneng New Energy, despite its large base, also achieved a growth rate of over 40%. Risk Warning: Downstream demand may fall short of expectations, risks of raw material price fluctuations, and policies may not be implemented as expected