Hunan Yuneng, the world's largest LFP cathode producer by volume (~30% global share, primary supplier to CATL and BYD), announced July 16 it will raise processing fees across all LFP product series by RMB 2,000/MT effective August 1. The driver cited in Hunan Yuneng's price-adjustment letter is iron phosphate, which the company says now accounts for over 70% of LFP processing fees and has risen from approximately RMB 10,000/MT at the start of 2026 to RMB 15,000/MT. That 50% YTD increase traces to sulphur, phosphoric acid, and ferrous sulphate, an upstream chain with zero lithium carbonate exposure.
SMM data shows the average LFP cathode material price in June at RMB 61,113/MT, up 19.34% YTD and over 80% YoY. Lithium carbonate, meanwhile, softened to approximately RMB 152,000/MT as of InfoLink's July 15 assessment, down roughly 5% week-on-week. The divergence matters for anyone using lithium carbonate as a directional proxy for LFP cell costs: the non-lithium cost stack is moving hard enough in the opposite direction to offset lithium softness at the cathode level, and Hunan Yuneng's fee increase will transmit that pressure downstream.
Hunan Yuneng's letter claims July industry operating rates reached 90% with high-end capacity constrained. That is the company's own characterization in a document designed to justify a fee increase. No independent confirmation from a third-party source is available as of publication.
The company: Hunan Yuneng (SZ: 301358). Global #1 in LFP cathode shipments for six consecutive years. 1.14 million tonnes shipped in 2025 (+60% YoY). Q1 2026 revenue RMB 14.96B (+121% YoY).
The fee hike: +RMB 2,000/MT on all LFP series, effective August 1, 2026.
Iron phosphate (FePO4): ~RMB 10,000 → RMB 15,000/MT YTD (+50%). Accounts for >70% of LFP processing fees per Hunan Yuneng's letter.
Why FePO4 rose: Sulphur supply disruption following US-Iran escalation (Feb 28, 2026) cut Strait of Hormuz flows. China imports >50% of its sulphur; Middle Eastern sources = 56.2%. Global sulphur circulation fell >10% per SMM's March analysis. Cost chain: sulphur → phosphoric acid → ferrous sulphate → iron phosphate.
LFP cathode material price: RMB 61,113/MT avg in June 2026 (SMM), +19.34% YTD, +80%+ YoY.
Lithium carbonate: ~RMB 152,000/MT (InfoLink, July 15). Softening WoW.
Implication: Lithium direction and LFP cathode direction have decoupled. Lithium-only cost models understate current cathode cost pressure.