Industry "Capacity Clearing" Rumored Document Confirmed! LFP Industry Closed-Door Meeting Held in Shenzhen

Exclusive | Industry "Capacity Clearing" Rumored Document Confirmed! LFP Industry Closed-Door Meeting Held in Shenzhen

On-site investigation conducted.

Amid the current "anti-involution" trend in new energy, lithium iron phosphate (LFP) capacity clearing has attracted significant market attention. Last week, a notice document regarding the convening of the LFP Materials Branch Council meeting circulated widely within the industry, sparking heightened market interest.

On August 22, an on-site investigation was conducted at the Shenzhen Holiday Inn Crown Plaza, where the meeting was held as scheduled in the London + Paris Hall on the hotel's second floor. Industry association officials and representatives from companies across the industrial chain gathered to discuss solutions for addressing industry overcapacity.

(August 22, 9:00 AM, Shenzhen Holiday Inn Crown Plaza)

According to the sign-in list obtained on-site, this meeting included a total of 13 participants, with 3 being staff members from the LFP Materials Branch Secretariat, and the remaining 10 representing LFP industrial chain companies. These included 5 listed companies or subsidiaries of listed companies: Hunan Yuneng New Energy Battery Material Co.,Ltd. (301358.SZ), Wanrun New Energy (688275.SZ), Anda Technology (830809.BJ), Shenzhen Dynanonic Co.,Ltd. (300769.SZ), and Dangsheng Shudao (Panzhihua) New Materials Co., Ltd., a subsidiary of Beijing Easpring Material Technology Co.,Ltd. (300073.SZ), as well as Youshan Technology, Fengyuan Lithium Energy, Changzhou Lithium Source, and Tianyuan Lithium Electric.

(August 22, 9:10 AM, Shenzhen Holiday Inn Crown Plaza)

In May this year, the China Industrial Association of Power Sources LFP Materials Branch was established in Shenzhen. The branch aims to promote technological standardization, eliminate backward capacity, strengthen international cooperation, and help China dominate the global LFP industrial chain.

Companies participating in today's meeting are all members of the LFP Materials Branch. The meeting agenda focused on discussing industry involution and backward capacity elimination plans, as well as low-carbon transformation pathways for the entire industrial chain. This was a true "closed-door meeting" with no media list and no live streaming or recording.

(August 22, 9:15 AM, Shenzhen Holiday Inn Crown Plaza)

The capacity clearing discussed in this meeting primarily refers to backward capacity in the LFP industry. LFP is currently the core cathode material for power batteries and energy storage systems. Over the past two years, due to overcapacity in the cathode materials industry, new capacity construction has slowed, and the LFP materials equipment industry has entered a downturn. Since the second half of 2024, with high growth in demand from the energy storage lithium battery industry and mass production of next-generation materials, the LFP cathode material industry is about to launch a new round of expansion.

As a new wave of expansion approaches, structural supply-demand contradictions in LFP remain prominent. According to industry statistics, China's LFP production reached 1.632 million tons in the first half of 2025, up 66.6% year-on-year, with nationwide available capacity surging significantly to 5.32 million tons, representing a massive capacity base.

Against the backdrop of abundant overall LFP capacity, the supply-demand landscape presents a situation of "total oversupply but structural shortage," with relatively scarce quality capacity and excess low-end capacity, resulting in low effective utilization rates across the industry. Leading companies maintain operating rates above 70% thanks to their technological, financial, and supply chain advantages, while second and third-tier small and medium-sized manufacturers face capacity idling due to product quality falling short of first-tier standards, necessitating accelerated exit of backward capacity.

Gaogong Industry Research believes that in this round of "anti-involution," the following types of LFP capacity may be eliminated: 1) LFP cathode material product upgrades are significant, and some companies will be eliminated for failing to keep pace with product upgrade rhythms; 2) After experiencing a 2-3 year industry trough, some capacity will be cleared due to corporate bankruptcies or cash flow depletion; 3) Some LFP cathode material production lines with unreasonable designs that cannot meet the latest LFP cathode material product requirements also face elimination.