Lithium Iron Phosphate Prices Double, Sulfur Prices Soar 167%

Since 2026, the upstream raw material market for new energy has experienced extreme market conditions. The spot price of lithium iron phosphate has more than doubled compared to the same period last year, exceeding 25,000 yuan per ton. The upstream basic raw material, sulfur, has seen a price increase of 167% in six months, reaching a near 18-year high, making it the core driver of this round of price increases.

I. Key Price Increase Data

Sulfur: The average price in February 2026 was only 3,783 yuan/ton, but surged to 10,114 yuan/ton in mid-June, an increase of exactly 167%. Domestic port sulfur inventory has decreased from 1.91 million tons at the beginning of the year to 900,000 tons, far below the safe inventory of 1.6 million tons, resulting in an extremely tight spot market supply.

Lithium Iron Phosphate: In the past year, the mainstream price has risen from approximately 30,000 yuan/ton to 60,000 yuan/ton, and the price of a single 400 kg package has increased from 10,000 yuan to 25,000 yuan. Despite the price doubling, downstream demand remains strong, with leading companies’ orders already booked until 2027.

II. Core Reasons for the Soaring Sulfur Prices

**Supply-Side Geopolitical Impact:** China’s dependence on imported sulfur is close to 50%, and nearly half of global sulfur trade passes through the Strait of Hormuz. In 2026, geopolitical tensions in the Middle East will disrupt shipping, leading to a 75% year-on-year decline in Middle Eastern arrivals. Coupled with Russia’s sulfur export restrictions, both core import channels will contract simultaneously, and there is no large-scale new capacity to fill the gap in the short term.

**Demand-Side Double Surge:** Traditional phosphate fertilizer demand accounts for 56% of total consumption. In recent years, lithium iron phosphate and Indonesian hydrometallurgical nickel smelting have become the main drivers of new demand. Indonesian nickel smelting projects alone will add over 6 million tons of sulfur demand in 2026, further depleting global inventories.

**Industry-Related Restrictions:** Over 90% of sulfur is a byproduct of oil and gas refining and cannot be mined independently. Supply elasticity is almost zero, and the price surge cannot force a rapid release of short-term capacity.

III. The Transmission Logic of Lithium Iron Phosphate Price Doubling

The complete cost transmission chain is: sulfur → sulfuric acid → wet-process phosphoric acid → iron phosphate → lithium iron phosphate. A price increase in one link puts pressure on the entire chain. Industry estimates suggest that producing 1 ton of lithium iron phosphate requires approximately 0.23 tons of sulfur. Sulfur prices surged by 167% in six months, adding nearly 4,000 yuan to the cost per ton of lithium iron phosphate. Coupled with a 50% increase in iron phosphate and a slight rise in lithium carbonate prices, material companies are unable to absorb these costs independently, ultimately driving the price of lithium iron phosphate to double year-on-year.

IV. Impact on the Entire Industry Chain

Upstream Material Companies: The industry experienced overcapacity and continuous losses in the past two years. Now, with both volume and price increases, performance has significantly recovered. Leading integrated companies with their own phosphate chemical and acid production capacity have a clear advantage, while small and medium-sized processing plants that rely solely on external raw materials face greater cost pressures, accelerating industry consolidation.

Downstream End-User Market: Lithium iron phosphate (LFP) is a core raw material for power batteries. A doubling of its price directly increases the production cost of battery cells. Some vehicle brands have initiated price adjustments and reduced discounts at the end-user level. In the first quarter of 2026, the average price of new energy passenger vehicles increased by 15,000 yuan year-on-year, leading to a temporary decline in the cost-effectiveness of new energy vehicles. The gross profit margin of energy storage projects has also been compressed accordingly.

Cross-Industry Chain Reaction: Sulfur is a common raw material for phosphate fertilizers, titanium dioxide, dyes, and pharmaceutical intermediates. Price increases simultaneously push up the production costs of fertilizers and coatings, and agricultural input prices have risen slightly, indirectly affecting the end-user prices of agricultural products.

V. Future Trend Forecast

Whether the high price trend can fall depends on the recovery of Middle Eastern shipping and the liberalization of overseas sulfur exports. As long as the supply gap persists, the high price pattern of LFP will be difficult to reverse. Once geopolitical conflicts ease and imported supplies recover, the entire industry chain will simultaneously enter a price correction cycle. Currently, many companies are switching to the thermal phosphoric acid process to hedge against sulfur dependence. In the medium to long term, the industry is also accelerating the development of domestic sulfur recovery and pyrite-based acid production alternatives to reduce the impact of overseas raw material fluctuations.

Market Analysis: Chinese Companies