(Yicai) Dec. 15 -- After years of industry-wide losses and rising input costs, major Chinese suppliers of lithium iron phosphate battery materials want to increase prices next year.

At a recent industry conference, one big manufacturer said processing fees for the full range of LFP products will be uniformly raised next year. Some producers have already increased prices, while others are still in negotiations with clients, according to insiders.

“Price increases have become an irreversible trend” that is expected to help restore profit levels across the industry, several firms noted. The sector has suffered losses for over 36 consecutive months, with six listed companies averaging a debt-to-asset ratio of as high as 68 percent, according to an industry association disclosure.

Even top suppliers only earn CNY400 (USD56.70) per ton of materials, a level that Zhou Bo, secretary-general of the LFP materials section of the China Industrial Association of Power Sources, described as unsustainable.

Faced with continuous losses, firms are having to raise prices to save themselves. According to figures from data compiler Choice, from 2023 through the first nine months of this year Wanrun New Energy Technology lost a total of CNY3.5 billion (USD500 million), while Wanrun New Energy, Lopal Tech, and Anda Technology were in the ready by CNY2.7 billion, CNY2 billion, and CNY1.6 billion, respectively.

“What we oppose is not competition itself, but vicious competition that disregards technology, cost, and quality,” CIAPS Secretary-General Wang Zeshen said. Amid industry-wide losses, greater transparency and a complete standards framework are essential to breaking the deadlock, Wang added.

Representatives from a number of top firms urged restraint in expanding capacity, and warned against signing destructive low-price long-term supply contracts. They urged against replicating overseas the vicious competition of the home market, and called for jointly safeguarding the profit margins and the "Made in China” brand image.

The immediate driver behind the proposed price hikes is a broad increase in raw material costs, including those of sulfur and sulfuric acid, noted a source at one LFP materials supplier. Whether buying whether buying LFP on the market or making it in-house, companies are facing cost pressures, with the trend likely to continue next year, making it reasonable to pass on higher costs, the person pointed out.

Many businesses at the conference also pointed out that demand in the energy storage market has exceeded expectations in the second half, with leading firms operating at high capacity utilization rates and in some cases beyond nameplate capacity, leading to further price hikes.

China's lithium-ion battery exports jumped 27 percent to USD55.4 billion in the January to September period from a year earlier, according to association data. In addition, domestic new energy vehicle adoption exceeded 45 percent and energy storage installations surged 60 percent.

Editor: Martin Kadiev