LFP | CATL Signs a 3-Year 420,000-Ton LFP Procurement Agreement with Jiangxi Shenghua

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LFP | CATL Signs a 3-Year 420,000-Ton LFP Procurement Agreement with Jiangxi Shenghua

Date：2024-08-19

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Keyword tags： LFP

On the evening of August 12th, automotive parts company FULIN P.M. (300432.SZ) announced that its holding subsidiary, Jiangxi Shenghua New Materials Co., Ltd., has recently signed a "Business Cooperation Agreement" with CATL (300750.SZ). According to the strategic cooperation plan of both parties and the future market demand, both parties have agreed to establish a long-term cooperation mechanism in the verification and production of lithium iron phosphate materials for lithium-ion batteries, to jointly explore the new energy market.

According to the main content of the cooperation, CATL has agreed to pay a certain amount of prepayment to support the construction of Jiangxi Shenghua's 75,000-ton/year capacity in Jiangxi; Jiangxi Shenghua promises to complete the construction of the Jiangxi base on schedule and reach an annual production capacity of 75,000 tons of LFP cathode material that meets CATL's production requirements.

At the same time, Jiangxi Shenghua promises to supply CATL's supply capacity as agreed during 2025-2027 and reserves it for CATL. Provided that Jiangxi Shenghua's products have a comprehensive advantage, CATL promises to purchase at least 140,000 tons from Jiangxi Shenghua each year during 2025-2027, and the monthly delivery plan for each year will be signed separately before October 1st of the previous year.

This means that during the three years from 2025 to 2027, CATL will purchase at least 420,000 tons of LFP materials from Jiangxi Shenghua.

Following the launch of CATL's 4C Super Charging LFP Battery on August 16th last year, only eight months later, on April 25th this year, CATL released the upgraded Xing Plus battery at the 2024 Beijing Auto Show, which is the world's first LFP battery to achieve a range of 1,000 kilometers, with a range of 600 kilometers after 10 minutes of charging. Since the launch of the 2023 Super Charging Battery, four models have been launched, and more than 50 new models will continue to be launched in 2024. Currently, car companies cooperating with CATL on Super Charging Batteries include Zeekr, Avitar, Chery, Neta, BAIC New Energy, Voyah, GAC Aion, etc.

According to statistics, Jiangxi Shenghua's existing LFP annual production capacity is 140,000 tons. The company can meet the diversified needs of customers and the market for high-density lithium iron phosphate (LFP) and lithium manganese iron phosphate (LMFP) based on its existing product and technical system. If the agreement with CATL is successfully implemented this time, and the subsequent production capacity continues to increase, and sales orders gradually expand, the scale effect of the production line will further appear, which will have a positive impact on the business performance of the LFP cathode material business.

According to data from the China Automotive Power Battery Industry Innovation Alliance, in July of this year, the LFP battery loading volume in China reached 30.1GWh, accounting for 72.5% of the total loading volume, which is more than twice that of NMC batteries. Since the LFP battery loading volume in China exceeded 50% in 2021, the loading volume of LFP batteries has exceeded that of NMC batteries for three consecutive years, reaching 51.7%, 62.4%, and 67.3% from 2021 to 2023.

In addition to electric vehicles, the demand for LFP batteries in the energy storage sector is also increasing significantly. According to data released by China local Energy Storage Industry Technology Alliance, in 2023, the global power storage projects that have been put into operation, the cumulative installed scale of new energy storage reached 91.3GW, which is nearly twice that of the same period in 2022, most of which are LFP batteries. Among them, lithium-ion batteries continue to grow rapidly, with an annual growth rate of over 100%. Even with conservative forecasts, it is expected that by 2030, the cumulative installed scale of new energy storage will reach 221.2GW, with a compound annual growth rate of 30.4% from 2024 to 2030, and an average annual increase in energy storage installation scale of 26.6GW.

In addition, the shipment of LFP cathode materials in China is also continuously increasing. According to public data statistics, from 88,000 tons in 2019 to 1.65 million tons in 2023, the CAGR from 2021 to 2023 was 85%.

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