Entering the market with the goal of becoming number one worldwide, the "super catfish" of the lithium iron phosphate industry has arrived!

“2026 will mark the beginning of the ‘14th Five-Year Plan’ and is a critical year for Wanhua’s transformation from a ‘chemical’ enterprise to a ‘chemical + new energy’ company. With new blueprints, new goals, and a new journey, a new leap forward is to be achieved.”

At the start of the new year, Liao Zengtai, Party Secretary and Chairman of Wanhua Chemical (SH: 600309), set new goals for over 30,000 Wanhua people.

Liao Zengtai stated that Wanhua will focus on making a breakthrough in its second main business—battery materials—“to build high-end, integrated, large-scale, green, global, and low-cost competitive advantages that are hard to surpass, becoming the ‘Chief Innovation Officer’ and ‘industry leader’ in global battery materials, and quickly achieving the grand goal of recreating a new Wanhua.”

To recreate a new Wanhua and become a global leader. This bold statement may sound ambitious, but Liao Zengtai is confident in these goals.

Hua Xia Energy Network notes that in early February, the Yantai Ecological Environment Bureau announced the proposed approval opinions for environmental impact assessments of three Wanhua Chemical lithium iron phosphate (LFP) projects.

These projects include Wanhua Chemical Laizhou’s annual production of 650,000 tons of lithium iron phosphate, Wanhua Chemical’s Green Power Industrial Park Phase II with an annual capacity of 200,000 tons, and Phase III with an annual capacity of 200,000 tons, totaling a capacity of up to 1.05 million tons. Additionally, Wanhua has already put into production 270,000 tons of lithium iron phosphate capacity. All together, the total exceeds 1.3 million tons, firmly placing Wanhua in the top tier!

Wanhua Chemical is a leading domestic chemical enterprise, founded in 1978, known in capital markets as the “Chemical Huawei” and “Huawei of the chemical industry,” with a current market value of about 300 billion yuan. In 2020, Wanhua began venturing into lithium batteries, and within five years, it ranked among the top ten suppliers of lithium iron phosphate cathode materials. The company is now rapidly expanding capacity, with a strategic focus on making lithium battery materials its “second growth curve.”

Wanhua’s strong entry has caused a huge shock in the lithium battery materials industry. With brand resources, financial strength, and resources all in place, Wanhua’s power is putting pressure on established players. A battle to reshape the industry landscape has already begun…

Four Generations of Leadership, Building the ‘Huawei’ of the Chemical Industry

Wanhua Chemical was established in 1978, originally as Yantai Synthetic Leather Factory, initially producing artificial leather products. At that time, the first-generation leader Liu Yongzhen declared the goal of “making it affordable for Chinese people to wear leather shoes,” and explored the difficult path of synthetic leather and MDI (diphenylmethane diisocyanate) industries.

MDI is an important chemical raw material, commonly used in polyurethane foams, rubber, fibers, coatings, and more. At that time, industrialized production technology for MDI was monopolized by European and American chemical giants. Wanhua tried various methods to overcome this barrier and promote domestic production of MDI.

In 1995, Wanhua welcomed its second-generation leader, Li Jiankui. One year after taking office, Wanhua developed MDI manufacturing technology, with plant capacity soaring to 15,000 tons. China thus broke a 60-year technological blockade by Western countries and became the fifth country worldwide with independent intellectual property rights capable of producing MDI.

During Li Jiankui’s tenure, besides technological breakthroughs, Wanhua launched the “Break the Iron Rice Bowl” campaign. In this reform, Ding Jiansheng first served as General Manager and later became Chairman, the third leader.

In 2000, under the impact of low-priced, high-quality foreign MDI products, Wanhua lost competitiveness and faced crisis again. At a critical moment, Ding Jiansheng restructured existing equipment and expanded capacity, such as building a 160,000-ton-per-year MDI production line in Ningbo. With increased output, costs were reduced, enabling price competition. Business expanded steadily, and Wanhua escaped near bankruptcy, becoming a benchmark enterprise in China’s chemical industry.

Wanhua Chemical Chairman Liao Zengtai (Photo source: official website)

In 2013, Liao Zengtai took over as the fourth-generation leader. His first major move was to push for Wanhua’s listing.

At that time, Wanhua was under dual management by Wanhua Industrial Group and Wanhua Synthetic Leather Group, resulting in low efficiency. Liao Zengtai decided to transform Wanhua from “three groups” into “one group.” This would involve significant layoffs and internal conflicts, but he persisted with reforms, overcoming many difficulties, and achieved a unified system. Wanhua completed its overall listing in 2018.

After going public, Wanhua experienced rapid growth. In 2021, its market value soared to over 440 billion yuan, ranking among the top domestic chemical companies. The same year, Wanhua’s revenue exceeded 100 billion yuan for the first time, earning the reputation of “Chemical Maotai” in capital markets.

At the peak of confidence, Liao Zengtai set ambitious goals: to make Wanhua Chemical among the top 10 global chemical companies by 2025, and among the top 3 by 2030.

In 2025, the U.S. “Chemical & Engineering News” listed Wanhua Chemical at 15th place among the top 50 global chemical companies, with chemical sales of $25.3 billion.

Although it did not reach the top ten, through four generations of leadership, Wanhua has become the undisputed “Huawei” of the chemical industry—a shining badge of China’s chemical sector.

Cross-industry Entry into Iron Lithium Cathode Materials, Recreating a New Wanhua

Wanhua is not only a leader in chemicals but also a dark horse in lithium iron phosphate cathode materials.

Recently, the Start Point Research Institute released the “2026 Global Lithium Battery Industry White Paper,” showing that Wanhua Chemical has already ranked among the top ten in China for lithium iron phosphate cathode material shipments by 2025.

Wanhua’s cross-industry move began in 2020. That year, the company planned to build a 50,000-ton-per-year lithium iron phosphate cathode material project in Meishan, Sichuan. In January 2022, the project officially broke ground with a total investment of 1.5 billion yuan.

In 2023, Wanhua Chemical explicitly designated battery materials as its “second growth curve.” Liao Zengtai led over 33,000 Wanhua employees to rally the troops, emphasizing “to carefully cultivate battery materials as a billion-yuan new business to recreate a new Wanhua.” Subsequently, Wanhua accelerated its battery material layout.

In November 2023, Wanhua Chemical announced plans to acquire control of Tonghua Group by controlling two listed companies, Zhongguo Huagong (SH: 600470) and Annada (SZ: 002136).

These companies mainly operate in the sulfur-phosphorus chemical sector, which can synergize with Wanhua’s battery materials business. At that time, Zhongguo Huagong already had a 50,000-ton refined phosphoric acid project and planned to raise no more than 800 million yuan to invest in a 280,000-ton-per-year battery-grade refined phosphoric acid project. Refined phosphoric acid is a key raw material for producing lithium iron phosphate cathodes.

Unfortunately, after months of due diligence and negotiations, the original plan was adjusted due to issues with asset integration, valuation, and control rights. In February 2024, Wanhua announced it would abandon controlling Tonghua Group and instead have its subsidiary directly acquire stakes in Zhongguo Huagong and Annada, reducing the transaction from several billion yuan to about 415 million yuan.

Ultimately, Wanhua controls Annada and holds shares in Zhongguo Huagong, shifting from “dual control” to “one control and one participation.” Although this acquisition fell short of initial expectations, it marked a key step in Wanhua’s battery material strategy.

Entering 2025, Wanhua’s battery material business accelerated. The company plans to invest approximately 4.19 billion yuan in equity investments mainly in battery materials, new materials, and international markets.

In February 2025, Wanhua broke ground on a new generation battery materials industrial park in Haiyang, with a total investment of 16.8 billion yuan, including three phases with a planned capacity of 500,000 tons of lithium iron phosphate and 300,000 tons of artificial graphite anodes; in August, Wanhua announced plans to expand its Meishan project with two additional LFP production lines, increasing capacity from 50,000 to 120,000 tons per year; in December, Wanhua signed an agreement for a 650,000-ton lithium iron phosphate project in Laizhou. In February, the environmental impact report for Laizhou was publicly disclosed.

Hua Xia Energy Network estimates that Wanhua’s total capacity of lithium iron phosphate, both in operation and planned, has exceeded 1.3 million tons, making it the largest among new entrants into the industry. Industry data shows that in 2025, Hunan Yueneng (SZ: 301358) will produce over 1 million tons annually, leading the industry, with plans to expand by another 395,000 tons. If Wanhua’s existing capacity is fully realized, it could rival Yueneng, and further expansion might position it as the industry leader.

While expanding capacity, Wanhua is also actively developing markets and securing downstream orders.

In March 2025, Wanhua signed a cooperation agreement with IBU-tec Advanced Materials in Europe to jointly develop LFP battery materials; in May, it signed a memorandum of understanding with European lithium iron phosphate battery manufacturer ElevenEs, supplying battery materials and supporting global supply chain for their Serbia production base. This indicates Wanhua’s LFP cathode products have entered the European market.

Additionally, domestically, in September 2024, Wanhua signed a strategic cooperation agreement with Haichen Energy Storage, aiming for in-depth collaboration in battery materials and energy storage products. Wanhua Chairman Liao Zengtai and Haichen co-founder and President Wang Pengcheng attended in person.

The expansion of capacity and securing of key customers are creating a closed loop of production and sales for Wanhua’s entry into the industry. As large factories come online, shipments of lithium iron phosphate are expected to surge. The market will see a strong competitor emerging, and Wanhua’s strategic goal of “recreating a new Wanhua” with a hundred-billion-yuan scale is within reach.

Low Cost, Large Capacity—Can Wanhua Replicate the MDI Myth?

In the business world, narratives are rarely linear; dreams often face harsh realities. For Wanhua, crossing into the lithium iron phosphate industry is no easy feat, and Liao Zengtai must confront tough truths.

Currently, driven by high demand in new energy vehicles and energy storage, the lithium battery industry chain is experiencing a new wave of capacity expansion. Since 2025, about 20 announced LFP capacity expansion projects with a total planned capacity exceeding 4 million tons per year. Even in a highly optimistic industry environment, such aggressive expansion raises concerns about overcapacity.

On one hand, this wave of expansion is based on a cycle in lithium batteries that has not yet fully concluded; the oversupply of LFP capacity is still unresolved, and this is another round of capacity increase on an already saturated market, exacerbating issues. On the other hand, intense industry competition and price wars are squeezing profit margins for LFP manufacturers, with many companies seeing increased revenue but no profit, and some even still operating at losses.

In this context, Wanhua’s million-ton-scale expansion will likely further lead to overcapacity, which is not good news for the entire industry, nor is it an ideal timing for a “new generation” like Wanhua entering the scene.

The LFP cathode industry is already mature, with stable market cooperation between manufacturers and downstream battery cell companies, and the market landscape is relatively stable. For Wanhua, a relatively new entrant, gaining more customer resources and brand recognition remains a major challenge. In such a market environment, the only option is to focus on reducing costs and prices.

In fact, Wanhua’s reputation as the “chemical Maotai” stems from its exceptional cost control. This is a key advantage that competitors must acknowledge and one of Wanhua’s strongest weapons—by 2025, global MDI prices had fallen to a 20-year low, causing giants like Covestro and Hunstman to operate at a loss, yet Wanhua still maintained profitability.

Wanhua’s ability to stay cost-competitive is partly due to its large-scale, counter-cyclically low-cost expansion during market downturns, directly beating high-cost rivals.

Wanhua’s global R&D center project

By the end of 2025, Wanhua, BASF, Covestro, Hunstman, and Dow together hold about 91% of the global MDI capacity. Wanhua’s capacity of 3.8 million tons per year keeps it at the top worldwide. The company is also pushing forward with a technological upgrade of its Fujian MDI plant. Once completed, Wanhua’s MDI capacity will reach 4.5 million tons annually, far ahead of competitors.

Data shows that Wanhua’s seventh-generation MDI technology achieves nearly 100% catalyst recovery, with unit production costs 10-15% lower than BASF and Dow. In September last year, the U.S. Department of Commerce announced a preliminary affirmative final ruling in an anti-dumping investigation against Chinese MDI, with the highest dumping margin reaching 511.75%, and Wanhua’s preliminary tax rate at 376.12%. This reflects Wanhua’s extremely low costs.

It is this massive capacity and low-cost advantage that makes overseas competitors “operate at a loss day by day,” falling behind step by step. This further enhances Wanhua’s competitive edge and gives it confidence to expand further.

Clearly, Wanhua is now applying the same strategy used in MDI to its lithium iron phosphate cathode business. Soon, as Wanhua’s LFP products enter the market, the industry may face even fiercer price wars. The question remains: how much more can Wanhua reduce costs on its already near-cost products?

Moreover, the lithium battery industry, including LFP cathodes, is a highly cyclical sector. Although Wanhua has initially crossed one cycle, at that time its LFP business was still in the early stages and not yet feeling the market’s harshness. Now, with a new cycle underway and heavy investment, Wanhua’s true test has just begun.

Author’s note: Personal opinions only, for reference.