Cost Analysis of FP Iron Phosphate

The FP iron phosphate industry is currently facing significant cost pressures, with intense market price competition, and some companies are even operating at a loss.

Item	Specific Data / Status
Current market price	RMB 10,200–11,500 / ton
Mainstream production processes	Ammonium method, iron method, sodium method
Cost of ammonium method	Approx. RMB 12,000 / ton (highly affected by fluctuations in fertilizer raw materials)
Cost of iron method	Approx. RMB 11,500 / ton (relatively stable)
Cost of sodium method	Approx. RMB 12,500 / ton (highest cost)
Industry profitability	Prices have fallen below the cash cost line for some enterprises; widespread losses
Upstream raw material examples	Monoammonium phosphate (MAP), wetprocess phosphoric acid, ferrous sulfate, etc.
Downstream procurement characteristics	High concentration in the lithium FP iron phosphate industry; strong buyer bargaining power with significant price pressure

The cost analysis of FP iron phosphate is primarily conducted from the perspective of different production process routes. The following is a cost analysis of the three mainstream processes: the ammonium method, the sodium method, and the iron method.

Ammonium Method

Raw Material Costs

• Monoammonium phosphate (MAP): The main phosphorus source, with a consumption of approximately 0.78 tons per ton of product, priced at RMB 5,400–6,350/ton. It accounts for a relatively high proportion of the cost.

• Ferrous sulfate: The iron source, with a consumption of approximately 2.2 tons per ton of product, priced at RMB 195–215/ton, resulting in a relatively low cost.

• Hydrogen peroxide: Consumption of approximately 0.48 tons per ton of product, priced at RMB 816–940/ton, used for the oxidation reaction, accounting for a certain proportion of the cost.

• Ammonia water: Used for pH adjustment, with a consumption of approximately 0.63 tons per ton of product, priced at around RMB 560/ton, resulting in a relatively controllable cost.

Other Costs

• Energy consumption: Includes electricity, natural gas, steam, and water. Electricity consumption is about 1,200 kWh, natural gas about 250 m³, steam about 4 tons, and water about 40 tons. The total energy cost is approximately RMB 2,620.

• Labor and equipment: Costs including labor, equipment depreciation, manufacturing expenses, packaging, sales expenses, and financial expenses total approximately RMB 1,800.

Byproduct revenue: The byproduct, ammonium sulfate, can be sold as fertilizer, with a consumption of approximately 1.1 tons per ton of product and a price of about RMB 500/ton (offsetting costs), which helps reduce the overall cost.

Sodium Method

Raw Material Costs

• Phosphoric acid: The main phosphorus source, with a consumption of approximately 0.64 tons per ton of product, priced at around RMB 6,350/ton, resulting in a relatively high cost.

• Ferrous sulfate: Consumption similar to the ammonium method, approximately 2.2 tons per ton of product, with a cost comparable to that of the ammonium method.

• Caustic soda: Used for pH adjustment, with a consumption of approximately 1.2 tons per ton of product, priced at around RMB 800/ton. This is a unique and relatively high cost item for the sodium method.

• Hydrogen peroxide: Consumption similar to the ammonium method, approximately 0.48 tons per ton of product, with a cost similar to that of the ammonium method.

Other Costs

• Energy consumption: Electricity consumption is about 1,000 kWh, natural gas about 250 m³, steam about 4 tons, and water about 30 tons. The total energy cost is approximately RMB 2,470.

• Labor and equipment: Costs including labor, equipment depreciation, manufacturing expenses, packaging, sales expenses, and financial expenses total approximately RMB 1,750.

Byproduct revenue: The byproduct, sodium sulfate, has low value and generates essentially no revenue, which can be considered negligible.

Iron Method

Raw Material Costs

• Phosphoric acid: Consumption of approximately 0.76 tons per ton of product, priced at around RMB 6,350/ton, resulting in a high cost.

• Iron metal: The iron source, with a consumption of approximately 0.37 tons per ton of product, priced at around RMB 5,000/ton, accounting for a significant portion of the cost.

• Hydrogen peroxide: Consumption of approximately 0.48 tons per ton of product, with a price similar to that in the ammonium and sodium methods, accounting for a moderate proportion of the cost.

Other Costs

• Energy consumption: Electricity consumption is about 800 kWh, natural gas about 220 m³, steam about 4 tons, and water about 10 tons. The total energy cost is approximately RMB 2,182.

• Labor and equipment: Costs including labor, equipment depreciation, manufacturing expenses, packaging, sales expenses, and financial expenses total approximately RMB 1,350.

Byproduct revenue: There are essentially no byproducts, so no byproduct revenue is generated.

Overall, the ammonium method has the lowest cost, followed by the sodium method, while the iron method has the highest cost. However, costs for individual companies may vary due to factors such as raw material procurement prices, energy costs, equipment efficiency, and management levels.

Interpretation of Costs and Market Status

Cost-Price inversion: As shown in the table, the current market price of FP iron phosphate has fallen below the cost of mainstream processes. This means that many companies are selling at a loss. For enterprises relying on the ammonium method in particular, when the prices of raw materials such as industrial-grade monoammonium phosphate (MAP) and phosphoric acid rise, production costs can even exceed RMB 12,000/ton.

Supply-Demand imbalance and weak bargaining power: As of July 2025, domestic FP iron phosphate production capacity reached as high as 4.34 million tons/year, yet the operating rate was only about 65%. On one hand, capacity continues to be released, resulting in ample market supply; on the other hand, downstream lithium iron phosphate (LFP) enterprises are highly concentrated, wielding strong bargaining power in procurement and continuously passing cost reduction pressure up the supply chain.

Advantages and Disadvantages of Different Production Processes

The choice of process route directly determines a company's resilience to cost fluctuations.

Ammonium method: This method offers significant cost advantages and can further reduce costs through the sale of the by-product ammonium sulfate. However, its drawback is that it is heavily influenced by the fertilizer market. When the prices of MAP and phosphoric acid rise, its cost advantage quickly diminishes and may even be overtaken by other processes.

Iron method: This process directly utilizes iron-containing raw materials to react with phosphoric acid. The raw material sources are extensive and prices are relatively stable. Additionally, this method generates less wastewater, leading to lower environmental treatment costs. As environmental requirements become increasingly stringent and raw material prices fluctuate, this method is gaining growing appeal.

Sodium method: This method has the highest production cost among the three mainstream processes and generates a large quantity of sodium salt by-products that require proper disposal. Currently, it lacks cost competitiveness.

Industry Trends and Paths to Breakthrough

In response to current challenges, the FP iron phosphate industry is exhibiting two major development trends:

Integrated industrial chain layout: To counter cost fluctuations and secure supply, upstream and downstream enterprises are pursuing vertical integration to reduce costs and improve efficiency. Downstream battery giants (such as CATL and BYD) are restraining upstream prices by taking stakes in or forming strategic partnerships with precursor suppliers. Meanwhile, leading companies with advantages in phosphate rock resources are also expanding against the market trend, maintaining their competitive edge in the fierce market through integrated layouts.

Technological upgrading and high-end orientation: Market demand is guiding downstream LFP enterprises to shift toward high-voltage, high-density premium products. Consequently, FP iron phosphate companies also need to strengthen technological research and development, optimize production processes, and produce products that meet the requirements of high-end LFP materials in order to gain pricing premiums.