CATL LFP feedstock supply strategy accelerates amid global EV demand

CATL

The CATL LFP feedstock supply strategy is accelerating as the battery giant locks in long-term cathode materials. By prepaying key partner Shenghua, the CATL LFP feedstock supply strategy aims to stabilise costs and secure volumes. As EV demand rises, the CATL LFP feedstock supply strategy underpins CATL’s dominance in LFP batteries and its next growth phase.

Prepayments deepen CATL LFP feedstock supply chain integration

CATL has agreed significant prepayments to secure LFP from Jiangxi Shenghua, part-owned by Fulin Precision. It will pay 500mn yuan by September and a further Yn1bn in November to support Shenghua’s capacity expansion. However, supply volumes and pricing remain undisclosed, reflecting competitive sensitivity.

The CATL LFP feedstock supply strategy comes on top of earlier support for Shenghua’s new plants. CATL is backing a 160,000 t/yr LFP facility in Yichun and a 200,000 t/yr LFP plant in Sichuan. As a result, Shenghua’s LFP output already jumped from 42,159t in 2023 to 128,240t in 2024, with sales closely tracking that growth.

Meanwhile, CATL signed a Yn6bn deal with major LFP producer Jiangsu Lopal in mid-September. That contract secures 157,500t of LFP for CATL’s overseas factories from 2025 to 2031. Together, these moves show how the CATL LFP feedstock supply strategy combines prepayments, project finance and multi-year offtake to lock in LFP at scale.

CATL LFP feedstock supply supports EV battery expansion and sodium-ion push

CATL is coupling its LFP security with downstream partnerships and technology upgrades. The firm signed a cooperation agreement with EV maker Li-Auto on safety and ultra-fast charging. Li-Auto has already produced more than 1mn vehicles using CATL battery technology, cementing a deep platform relationship.

Battery installations underline the strength of CATL’s position. The company installed 190.9GWh of power batteries in January-June, up 38pc year on year. Therefore, the CATL LFP feedstock supply strategy is not just about risk management. It is also about sustaining leadership as competitors chase similar EV opportunities.

At the same time, CATL is preparing its next technology step with the Naxin sodium-ion battery. Mass shipments are targeted for 2027, with an energy density of 175Wh/kg. The company says this performance can cover over 40pc of domestic passenger vehicle demand. Sodium-ion will not replace LFP, but combined with a robust CATL LFP feedstock supply base, it gives CATL a wider toolkit across price and performance segments.

The Metalnomist Commentary

CATL is turning LFP procurement into a strategic weapon, using prepayments and capex support to secure future capacity. Its parallel push into sodium-ion suggests a portfolio approach to cathode chemistry rather than a single-bet strategy. For rivals and automakers alike, CATL’s LFP deals with Shenghua and Lopal are a clear signal that upstream security is now central to battery competitiveness.

Lopal LFP supply deal with CATL underpins global battery expansion

Lopal

The Lopal LFP supply deal with CATL marks a major step in China’s global battery materials strategy. Under the agreement, Jiangsu Lopal will supply 157,500t of LFP cathode material to CATL’s overseas plants from 2025 to 2031. As a result, the Lopal LFP supply deal with CATL secures long term CAM supply for CATL’s international gigafactories and EV customers.

Global significance of the Lopal LFP supply deal with CATL

The Lopal LFP supply deal with CATL is valued at more than 6bn yuan, highlighting its strategic weight. The contract will feed CATL’s overseas battery factories, supporting EV and energy storage growth outside China. Therefore, CATL locks in a predictable stream of LFP CAM while scaling its non Chinese manufacturing footprint.

LFP is gaining share in global batteries because it offers lower cost and strong safety performance. However, reliable cathode supply remains crucial as more OEMs shift from nickel rich chemistries. The Lopal LFP supply deal with CATL supports this trend by linking a leading LFP producer to the world’s largest cell maker.

Lopal has grown rapidly since acquiring BTR’s LFP business in 2021. Its output reached 184,697t in 2024, up 56pc year on year. Meanwhile, LFP sales rose 65pc to 178,287t, confirming strong downstream demand. This growth gives CATL confidence in Lopal’s ability to deliver under a long dated contract.

Lopal’s internationalisation push and new LFP capacity

The CATL agreement sits at the centre of Lopal’s internationalisation strategy. Lopal already holds term contracts with Cornex, Ford and LG Energy Solution. Therefore, the company is building a diversified global customer base across Chinese and foreign cell makers and OEMs.

Lopal’s production network spans several Chinese provinces, supporting scale and logistics flexibility. Major bases operate in Jiangsu, Shandong, Tianjin, Sichuan and Hubei. This footprint helps balance regional feedstock, power and permitting conditions. It also spreads risk as domestic competition in LFP intensifies.

Internationally, Lopal is building new capacity in Indonesia to support regional demand and localisation policies. The company has completed a 30,000 t/yr LFP phase there and is constructing a 90,000 t/yr second phase. It aims to finish this expansion by the end of 2025, creating a 120,000 t/yr Indonesian hub. This timing aligns with the ramp up of CATL and other Asian players across Southeast Asia.

The Lopal LFP supply deal with CATL will likely leverage both Chinese and Indonesian output over time. As a result, Lopal can optimise feedstock sourcing, shipping routes and tariff exposure. This flexibility matters as trade rules and battery content regulations evolve in the US, Europe and key emerging markets.

The Metalnomist Commentary

This deal underscores how LFP chemistry and Chinese CAM producers are locking in long term roles in global EV supply chains. By pairing fast growing Indonesian capacity with deep Chinese experience, Lopal becomes a more systemically important supplier to CATL and other majors. Market participants should watch how pricing formulas, regional sourcing splits and future offtake deals evolve, as these will shape LFP cost curves outside China.

XTC GEM CAM feedstock deal tightens China’s battery materials supply chain

XTC

XTC GEM CAM feedstock deal marks a major step in securing China’s high-end battery materials supply. Under the XTC GEM CAM feedstock deal, XTC New Energy will lock in large volumes of cobalt, nickel and lithium inputs. This XTC GEM CAM feedstock deal supports long-term cathode active material output for NCM, LCO and LFP product lines. As a result, Chinese battery makers gain greater visibility on costs and availability during a volatile raw material cycle.

Long-term CAM feedstock deal anchors XTC’s growth strategy

XTC New Energy agreed to purchase 150,000 t/yr of CAM feedstock from GEM between 2026 and 2028. The package covers cobalt chloride, nickel sulfate, cobalt tetroxide, NCM precursor and lithium salts for large-scale cathode production. This diversified basket reduces single-material risk and helps XTC balance different chemistries across consumer and power batteries. The deal also deepens an existing partnership, signalling confidence in GEM’s ability to deliver consistent quality volumes. Consequently, both companies move closer to a vertically aligned, closed-loop battery materials ecosystem.

XTC has rapidly grown sales of lithium cobalt oxide on the back of device replacement cycles and AI-enabled electronics. Government subsidies that push consumers to upgrade phones and tablets are boosting high-end cobalt-rich cathode demand. Meanwhile, combined sales of NCM and LFP cathodes also rose, reflecting broader growth across energy storage and EV platforms. By locking in feedstock now, XTC can support more aggressive volume and product planning with key OEMs.

China CAM feedstock integration deepens links with global battery OEMs

The agreement reinforces China’s position at the centre of the global CAM and precursor value chain. GEM will channel critical precursors to XTC, which already supplies ATL, Samsung SDI, Murata, LG Chem and BYD. These relationships span mid to high-end consumer devices and extend into power lithium battery producers like CALB and CATL. Therefore, the enhanced feedstock pipeline will indirectly underpin cell production for phones, tablets, EVs and stationary storage worldwide.

Tighter integration between feedstock suppliers and cathode producers can also stabilise pricing and contract structures. Long-term supply deals encourage joint planning on capacity, quality and sustainability metrics, important for global OEM qualification. At the same time, dependence on Chinese CAM feedstock raises questions for western policymakers about diversification and supply security. However, until alternative precursor hubs reach scale, China’s integrated CAM ecosystem will remain a critical anchor for lithium-ion supply chains.

The Metalnomist Commentary

This agreement shows how Chinese CAM producers and recyclers are quietly locking in the next wave of battery growth. As XTC and GEM align on volumes and chemistries, their joint leverage over cobalt, nickel and lithium flows will rise. For non-Chinese OEMs, the deal underscores the urgency of building competitive precursor and CAM capacity outside China.

Yuneng to Expand LFP and LMFP Cathode Capacity to Meet Battery Market Growth

Yuneng

$899 Million Investment Targets Higher Energy Density Materials

Hunan Yuneng, China’s largest lithium iron phosphate (LFP) cathode active material producer, will significantly expand production capacity to serve surging demand in the lithium-ion battery sector. The company plans to raise 4.8bn yuan ($899mn) for a new project producing 320,000 t/yr of lithium manganese iron phosphate (LMFP), 75,000 t/yr of ultra-long cycle LFP, and 100,000 t/yr of iron phosphate feedstock.

The LMFP line, located in Anning, Yunnan province, will also be able to produce LFP. Yuneng expects construction to finish within four years. Meanwhile, the ultra-long cycle LFP and iron phosphate plants in Fuquan, Guizhou province, will be built within 12 months, strengthening the company’s diversified product portfolio.

Performance Advantages and Market Competition

LMFP cathodes provide higher energy density, longer driving ranges for EVs, better winter performance, and lower manufacturing costs than standard LFP. However, they have shorter life cycles and weaker charge-discharge capacity. Major players such as CATL, BYD, and Eve Energy are also investing in LMFP technology, intensifying competition in the high-performance cathode market.

Yuneng achieved 101% LFP capacity utilization in 2024, producing 735,462t—up 46% from 2023. Sales reached 710,565t, with 41% directed to the energy storage sector. LFP batteries continue to dominate China’s lithium-ion battery market, holding an 80% production share from January to April 2024, far exceeding the share of ternary chemistries such as NCA/NCM.

Strategic Outlook for Cathode Materials Expansion

By expanding LFP and LMFP output, Yuneng positions itself to capture additional market share as both EV adoption and energy storage demand accelerate. The cost advantage of LFP remains a key factor in China’s battery market dominance, while LMFP technology offers potential for premium applications once lifecycle limitations are addressed.

The Metalnomist Commentary

Yuneng’s investment demonstrates how Chinese cathode producers are racing to scale capacity in response to both domestic and global demand. While LFP will remain the dominant chemistry in China’s battery market, LMFP could emerge as a niche solution for applications requiring higher energy density—if manufacturers can resolve its durability challenges.

CATL Begins Construction of 25 GWh/yr Battery Plant in Fujian

CATL

China’s largest battery manufacturer, CATL (Contemporary Amperex Technology Co., Ltd.), has started building its No. 5 plant at the Fuding battery production complex in Fujian province. The plant, with an annual production capacity of 25 GWh, is part of CATL’s strategy to expand its dominance in the global new energy power battery market.

Key Details of the Project

• Investment: 6.47 billion yuan ($910 million).
• Timeline: Construction is set to finish by June 2025, with production commencing shortly afterward.
• Fuding Complex: CATL’s largest single battery production site, with a total capacity of 120 GWh/yr, has already completed four plants.

A 1 GWh lithium-iron-phosphate (LFP) battery typically requires 2,300 tons of lithium carbonate feedstock, underscoring the significant demand for lithium resources that the plant will generate.

CATL’s Global Production Leadership

• Current Output: CATL produced 211 GWh of batteries from January to June 2024, accounting for 65% of its total capacity of 323 GWh/yr.
• Growth: This represents a 37% increase from 154 GWh during the same period last year.
• Global Footprint: CATL operates 13 production bases worldwide, solidifying its leadership in the energy storage and electric vehicle battery sectors.

Concerns About Potential Oversupply

China’s power battery production has led global growth over the past decade, driven by surging demand from the new energy vehicle (NEV) market. However, rapid capacity expansions have raised concerns about potential oversupply, which could pressure margins and disrupt market dynamics, according to industry participants.

Strategic Importance

CATL’s latest expansion in Fujian aligns with its mission to support the fast-growing NEV market while staying ahead of competitors. The additional capacity will play a critical role in meeting the global shift toward renewable energy and electric mobility.