The 2023 production capacity of LFP by-product ammonium sulfate will be significantly increased, which will slightly suppress the price
For every ton of lithium iron phosphate produced, approximately one ton of ammonium sulfate is generated.
The production process involves using ferrous sulfate as raw material and employing the ammonia method in the co-precipitation process to produce lithium iron phosphate (ultimately). During the production process, various streams such as the first-stage filtrate, second-stage filtrate, and other filtrates will undergo treatment in the associated wastewater treatment facility. The treatment process involves “adjustment + precipitation + ultrafiltration + reverse osmosis + MVR” (mechanical vapor recompression), which generates a significant amount of ammonium sulfate. The main waste gases from the lithium iron phosphate workshop include sulfuric acid mist, ammonia gas, flash evaporation drying exhaust gas, and ammonium sulfate drying dust.
2022 witnessed a significant surge in the production capacity of lithium iron phosphate (LFP) cathode materials. The total production of LFP in 2022 reached approximately 1.03 million metric tons, marking a 129% increase compared to the previous year.
Regional Distribution of LFP Production Capacity:
By the end of 2022, the top five provinces with the highest LFP production capacity were Sichuan, Yunnan, Hubei, Anhui, and Hunan, collectively accounting for around 70% of the national total. The southwestern region, comprising Yunnan, Guizhou, Sichuan, and Chongqing, maintained the largest LFP production capacity, representing 46% of the national total. The central region (Hubei, Hunan, and Henan) surpassed the eastern region in terms of production capacity, accounting for 24% of the national total. The eastern region (Zhejiang, Anhui, Jiangsu, Jiangxi, Shandong, and Fujian) ranked third with a 20% share of the national total. The southern, northern, and northwestern regions had limited additions to LFP production capacity in 2022, comprising only 10% of the national total. The southwestern region witnessed the highest increase in production capacity, reaching nearly 680,000 metric tons, and became a hub for the LFP industry, benefiting from low electricity prices, abundant mineral resources, local lithium battery industry layout, and favorable policies. The central region experienced the highest growth rate in LFP production capacity in 2022, primarily due to the contributions from several companies such as Wanrun New Energy, Rongtong High-Tech, Hunan Yueneng, and Changsha Bangsheng.
Distribution of LFP Production Capacity by Companies:
In 2022, there were a total of 13 companies (grouped) with LFP production capacity exceeding 50,000 metric tons, accounting for 83.5% of the national total capacity. Apart from expansions by leading companies, there was participation from cross-industry enterprises such as Bangsheng, Hailuo Entrepreneurship, and Longbai. Battery manufacturers like BYD, CATL, Contemporary Amperex Technology Co. Ltd., and EVE Energy also got involved in various ways. By the end of 2022, the domestically operational LFP production capacity reached 2.146 million metric tons per year, marking a 197% increase compared to 2021. It is projected that there will be an additional production capacity of over 2 million metric tons in 2023, considering the planned projects. Due to the significant increase in new capacity in 2022, the average nominal operating rate for LFP in 2022 was less than 50%, indicating an imminent overcapacity situation. In 2023, with the release of production capacity by major companies, the overall supply of LFP nationwide is expected to reach 2.371 million metric tons. However, the demand is projected to be only 1.846 million metric tons, resulting in an excess supply of 525,000 metric tons.
