# Battery cathode materials: Cycles How a lithium boom and bust crushed cathode makers' margins Source page: https://www.materialinsights.org/chemicals/cathode_materials/cycles/ How a lithium boom and bust crushed cathode makers' margins What this tab covers How its prices and margins move: past booms and busts with price levels, the spread or margin that the industry watches, the drivers of the cycle and the metrics to track. Cathode prices are mostly pass-through: contracts index lithium, nickel and cobalt and add a processing fee. So revenues swing with metal prices while margins swing with utilisation. The 2021-22 lithium boom inflated revenues; 2023-25 brought price collapse and LFP overcapacity at about 50% utilisation, which crushed processing fees. 2025 demand growth of 34-50% and a 2026 rebound in lithium, cobalt and phosphate inputs turned the cycle. The floor is cash cost of the marginal Chinese plant; the ceiling is set by when cell makers switch chemistry (NMC to LFP, LFP to sodium-ion). The spread to watch **Processing fee (cathode price minus metal content value)** Cathode price less lithium, nickel, cobalt and iron phosphate value at index prices. It is not published freely; SMM says LFP processing fees fell in 2024 and were hard to raise in 2025. #### Booms and busts 1. 2021-2022 EV sales and restocking drove a lithium boom. Cathode revenues and profits soared, and Chinese firms announced large LFP expansions. US battery-grade lithium carbonate average rose from $11,700/t (2021) to $63,700/t (2022) (Benchmark via USGS) 2. 2023-mid 2025 Lithium prices collapsed and new LFP capacity flooded the market. LFP industry utilisation fell to about 50% and processing fees fell (SMM). lithium carbonate fell to $11,800/t (2024) and $9,000/t (2025) (USGS) 3. Late 2025-2026 Storage demand and EV growth lifted world cathode shipments 34% (SNE); GGII's China tally rose about 50%. Input prices rose and GGII expects 2026 cathode prices more than 30% above 2025. cobalt rose over 170% and lithium carbonate nearly 60% from the start of 2025 to early 2026 (GGII); Fastmarkets carbonate CIF CJK $24.50-25.80/kg in mid-May 2026, $15.20-18.50/kg on 2 Oct 2026 #### What drives the cycle - **Lithium carbonate price.** Sets about half of LFP cost and is passed through, so it drives cathode revenues more than volumes do. - **Chemistry mix (LFP vs ternary).** LFP's rise from about 60% to about 70% of world cathode volume shifts demand from nickel and cobalt to iron and phosphate. - **Storage demand.** Over 600 GWh of Chinese ESS cells in 2025 made storage the swing buyer of LFP. - **Trade policy.** Chinese export controls (suspended to 10 Nov 2026), US foreign-entity rules and EU rules decide where new plants are built. #### Metrics to track | Metric | Why it matters | Where to track it | |---|---|---| | **Cathode shipments by chemistry** | Volume and mix | GGII; SNE Research; SMM | | **Lithium carbonate CIF CJK and GFEX futures** | Main cost driver | Fastmarkets; GFEX | | **LFP operating rate** | Margin signal | SMM | | **Listed company margins (Hunan Yuneng, Ronbay, EcoPro BM)** | Processing fee proxy | company reports | ## Other sections - [Summary](https://www.materialinsights.org/chemicals/cathode_materials/index.md) - [Overview](https://www.materialinsights.org/chemicals/cathode_materials/overview/index.md) - [Correlation](https://www.materialinsights.org/chemicals/cathode_materials/correlation/index.md) - [Production route](https://www.materialinsights.org/chemicals/cathode_materials/routes/index.md) - [Production](https://www.materialinsights.org/chemicals/cathode_materials/production/index.md) - [Feedstocks](https://www.materialinsights.org/chemicals/cathode_materials/feedstocks/index.md) - [Trading](https://www.materialinsights.org/chemicals/cathode_materials/trading/index.md) - [Movement](https://www.materialinsights.org/chemicals/cathode_materials/movement/index.md) - [Regulation](https://www.materialinsights.org/chemicals/cathode_materials/regulation/index.md) - [Characteristics](https://www.materialinsights.org/chemicals/cathode_materials/characteristics/index.md) - [Emissions](https://www.materialinsights.org/chemicals/cathode_materials/emissions/index.md) - [Relationships](https://www.materialinsights.org/chemicals/cathode_materials/links/index.md)