Guotou Securities: Demand realization is ahead of new production capacity release, and the price hike cycle of ferrous phosphate is expected to begin.

Guotou Securities published a research report stating that, from the perspective of the supply side, the previous market concerns about the supply and demand situation of lithium iron phosphate may mainly come from the potential supply impact brought by the concentrated release of new production capacity in 2026. Looking ahead, driven by the auto shows in April and May, passenger car sales may see some increase, coupled with the continuous improvement in demand for commercial vehicles and energy storage, the demand for battery core factory orders is expected to further increase. It is predicted that the production of iron lithium positive electrodes will maintain a growth rate of over 5% in April-May, bringing strong demand for lithium iron phosphate positive electrode materials. The bank believes that a higher frequency of price negotiations is likely a favorable prerequisite for opening the price increase cycle. Guotou Securities' main points are as follows: Event According to Baichuan Yingfu, as of April 29, 2026, the price of lithium iron phosphate was 12,950 yuan/ton, up 1.17% (+150 yuan/ton) from the previous trading day, with an increase of 18.43% since the beginning of the year. The release of new production capacity is significantly delayed, and the circulation of lithium iron phosphate may shrink From the supply side, previous market concerns about the supply and demand situation of lithium iron phosphate may mainly come from the potential supply impact brought by the concentrated release of new production capacity in 2026. According to ICC Xindu Information, the newly added production capacity of lithium iron phosphate in 2026 is expected to reach 3.285 million tons. If all of it is put into operation, the production capacity of lithium iron phosphate will reach 8.982 million tons by the end of 2026. However, the bank believes that there may not be much need to worry about the increment impact in the short term: 1) The new production capacity in 2026 will mainly be put into operation in the second half of the year; 2) The new production capacity needs a climbing and customer verification period of 3-6 months; 3) To meet market demand upgrades, it will take more than 3 months for adjustments. Furthermore, due to the industry's common challenges such as complex process control, high customization requirements, and difficulty in improving yield rates, most companies have difficulty in achieving the design production capacity. According to SMM New Energy, the total production capacity of the lithium iron phosphate industry is estimated to be 5.6 million tons by the end of 2025, but the actual effective production capacity is less than 5 million tons. Therefore, the bank believes that the release of lithium iron phosphate production capacity is significantly delayed, with limited contribution to this year's production volume, and the substantial impact may be evident in 2027, with the annual production volume still at the level of 4-4.5 million tons. At the same time, major export-oriented enterprises Guizhou Yayou and Bangpui