Graphite, LFP, and Solid-State Battery Materials
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Graphite, iron-phosphate (LFP), and next-gen battery materials are reshaping anode and cathode supply chains. On the graphite front, U.S. trade actions are rattling markets: the U.S. Commerce Dept. recently imposed a 93.5% anti-dumping duty on Chinese anode-grade graphite. Combined with prior countervailing duties (11.5%), Section 301 (25%), and existing tariffs, the effective tax on Chinese anode materials reaches ~160%. Since the U.S. mines negligible natural graphite, domestic battery and EV makers now face sharply higher costs for a previously cheap component. Meanwhile, our analysts report that the anode/graphitization sector is oversupplied: abundant capacity and falling raw material costs (needle coke prices dropped ~5–6% in June) have pushed many producers into loss, squeezing prices. In this environment, artificial graphite prices fell in June and are expected to remain under pressure, though producers may resist price cuts into the off-season.
Meanwhile, lithium iron phosphate (LFP) supply has exploded. July LFP output in China jumped ~10% MoM (and +70% YoY) as new capacity came online. Downstream EV/storage makers are buying the cheaper, lower-quality LFP aggressively, but supply growth is outpacing demand: many LFP plants report loose inventories and stable-to-lower pricing despite high volume. Higher-input costs (ferrous sulphate is rising) are squeezing margins, and Chinese firms will continue ramping production through 2025. Investors should note the shifting mix: with more LFP, cobalt/nickel‐heavy chemistries will represent a smaller share of total battery capacity.
Finally, solid-state battery technology is drawing industry focus – though its impact on raw materials will be gradual. China’s solid-state initiatives are accelerating: firms like Hymson are actively developing both oxide and sulfide solid electrolyte routes, and analysts note the technology is at an “inflection point,” driven by policy and R&D support. As solid-state cells migrate toward commercialization, supply chains for novel materials (e.g. LLZO or sulfide electrolytes) will mature. For now, however, market participants should prioritize existing materials (graphite, LFP) and view solid-state as a longer-term trend that will eventually shift demand patterns.
Graphite Anodes: Tariffs and Oversupply
Global anode-grade graphite markets are entering a turbulent period. On July 31, the U.S. Dept. of Commerce set a 93.5% anti-dumping duty on Chinese synthetic/natural graphite for batteries. Because U.S. EV/ESS cells rely entirely on imports (no domestic graphite mining), this effectively adds ~160% tax on Chinese anode material. The move responds to domestic industry complaints (AAAMP) about unfair Chinese pricing. In practice, U.S. buyers (and Chinese exporters) are scrambling to mitigate costs: some battery makers (e.g. GM) have temporarily sourced Chinese LFP cells despite tariffs, but high-grade battery anode imports will now carry very heavy duties. This is likely to boost attractiveness of alternative anode chemistries (like lithium titanate or even silicon-dominant anodes) for certain applications, although graphite remains cheapest by far.
Meanwhile, supply-demand fundamentals for graphite anodes are soft. Our analysts report that anode/graphitization capacity exceeds demand, leading to deadlocked pricing. In June, falling input costs (petroleum needle coke prices down ~5–6%) allowed anode makers to expand output, even as LCO cathode demand faltered. The result was declining artificial graphite prices (and likely low utilization rates). With traditional summer slowdown ahead and no supply cutbacks yet, we expect continued downward pressure on anode material prices. Investors should watch capacity exits: some smaller tolling providers may shutter if losses persist, which could eventually stabilize prices. But for Q3/2025, expect Chinese synthetic graphite prices to remain soft, and U.S. makers to grapple with expensive imports unless they switch to domestic or third-country suppliers (e.g. natural flake graphite from Africa).
Lithium Iron Phosphate (LFP) – Production Surge vs. Demand
LFP batteries (with cathode FePO₄) dominate new EV and storage deployments in China and are gaining share globally. Correspondingly, Chinese LFP (industrial-grade iron phosphate) output is surging – up 10% MoM in July and ~70% YoY. Most new lines started mid-2025, meaning production will continue growing into year-end. However, this expanded supply is pressuring prices. We note that overall domestic supply remains “loose,” with many plants competing fiercely on price. Downstream purchasers now demand high-quality FePO₄ at lower cost, eroding suppliers’ margins. On the cost side, phosphate raw materials show mixed trends: MAP (mono-ammonium phosphate) fertilizer prices fell seasonally (weaker demand), but ferrous sulfate (Fe source) prices climbed, squeezing LFP production costs.
For market participants, the key is balance. In the near term, expect stable-to-lower LFP prices – China’s market saw modest price easing even as output jumped. Some sellers may use discounts or bundling to clear inventory. By late 2025, however, sustained high battery demand (PEV and utility storage) could absorb much of the new LFP capacity. Overseas, U.S. and European cell makers are scaling LFP (especially for lower-cost vehicles), so iron phosphate demand should grow globally. Watch also for technological upgrades: titanium-doping and nano-coating (to boost LFP energy density) are under development, potentially commanding higher prices in premium segments. Overall, LFP is now the low-cost, high-volume workhorse of the industry, so oversupply may cap short-term margins but the longer-term demand trajectory remains robust.
Solid-State Battery Trends
Solid-state batteries (SSBs) remain a future prospect, but one already influencing strategy. China’s industry is laying groundwork: major firms and research groups are developing both oxide and sulfide solid electrolytes. A recent Chinese securities report hailed SSBs as reaching an “inflection point,” driven by policy support and rapid scale-up of pilot production. Equipment and materials suppliers are gearing up (e.g. for tape-casting and thin-film deposition equipment).
What does this mean for raw materials? In the short term, very little changes: current lithium-ion supply chains will dominate for years. But longer-term, solid-state could shift cathode preferences (e.g. more reliance on Li-metal anodes or novel cathode chemistry) and boost demand for specialized electrolytes (LLZO, LiPON, sulfide powders). Our analysts advise that today’s investors should monitor solid-state developments (patents, pilot lines), but continue to focus on the existing battery metals (Ni, Mn, Co, Li, graphite, Fe) for immediate decisions. In summary, solid-state is a watch item – promising for the next decade, but not a driver of commodity prices just yet.