Samsung SDI more than doubles its LFP cathode order from Posco Future M

The floor on volume is 380,000 tons of LFP cathode ^[18]. Spread over the six delivery years from 2027 to 2032 ^[2][19], it averages a little over 63,000 tons a year on a level schedule ^[21], against about 1 trillion won of contract value a year ^[22]. Dividing the 6 trillion won ^[1] by the floor volume puts the implied average price at no more than about 15.8 million won a ton ^[20]. The Korea Herald converted the headline figure to $4.48bn ^[10] and Seoul Economic Daily to $4.2bn ^[11].

For Posco Future M, the contract is mainly about planning. The Korea Herald says the orders will help it lift plant utilization and coordinate capacity investment and raw-material purchases ^[7]. Posco Group's investments in lithium salt lakes and graphite mines are meant to connect raw materials to battery-material production ^[14], and a six-year cathode order puts a buyer at the end of that chain. "We will keep strengthening the competitiveness of our battery materials business on the foundation of the POSCO Group value chain, including lithium brine lakes and graphite mines, and further solidify our position within the group," a company official said, according to Seoul Economic Daily ^[13].

Samsung SDI's purchase moves cathode supply to a Korean producer while the battery industry looks for alternatives to Chinese suppliers ^[17]. The two companies expect the partnership to help them in energy storage systems as well as electric vehicles ^[16]. The Korea Herald calls the result a more diversified supply base for Samsung SDI ^[9]. It is diversified by country of origin. For LFP cathode, the contract puts at least 380,000 tons with a single counterparty ^[18], one that says it is the only company in Korea making NCA, LFP and LMO cathodes alongside natural and synthetic graphite anodes ^[12].

The jump from August has more than one explanation. Samsung SDI may have raised its LFP plans since then ^[3]. The August figure may have been a first tranche, with the final contract filling in volume both sides expected all along. Or the bigger number may be a ceiling that lets Samsung SDI call for cathode it never needs ^[3]. Neither report gives a pricing formula or says whether Samsung SDI must take the full volume.

I lean toward the first explanation. A supplier that saw the LFP tonnage as an option would have less reason to attach a 45% rise in expected total supply to it ^[6]. The counter-case is that the 45% is Posco Future M's projection, a supplier's number about its customer ^[6].

If the volumes turn out to be non-binding, Posco Future M's six years of visibility amount to Samsung SDI's forecast, and any capacity it builds for this contract carries the demand risk on its own balance sheet ^[7].