POSCO Enters LFP Cathode Market With Major Long-Term Supply Deal

The agreement marks POSCO's first major LFP cathode-material order and represents an important diversification of its battery-materials portfolio, which has historically been focused on high-nickel cathode materials. LFP batteries are increasingly being adopted in energy storage systems (ESS) because of their lower cost, long cycle life and thermal stability. Demand for LFP-based ESS is rising rapidly in North America as electricity consumption increases and utilities and data-center operators invest in large-scale energy storage. The expansion of AI data centers is further supporting this trend by increasing demand for reliable power infrastructure. 

To support the new business, POSCO has converted part of its Pohang facility's existing high-nickel cathode production lines to LFP production. Customer prototype certification is currently underway, with mass production and supply targeted to begin by the end of 2026. This approach allows the company to enter the LFP market relatively quickly while leveraging existing manufacturing infrastructure rather than relying entirely on new capacity. 

A key competitive advantage will be POSCO Group's vertically integrated raw-material supply chain. POSCO plans to improve the cost competitiveness of its LFP cathode materials by using iron oxide generated as a by-product of POSCO's steelmaking operations along with lithium sourced from salt lakes in Argentina. This could help reduce raw-material costs and strengthen supply-chain security, which is particularly important as North American customers seek alternatives to Chinese battery-material suppliers. 

The company is also pursuing additional cathode and anode material supply agreements with global battery manufacturers and automakers, leveraging its integrated supply chain and technological capabilities to navigate evolving trade regulations across key markets.  

In March, POSCO secured a large-scale, long-term contract worth approximately KRW 1 trillion with a global automaker to supply synthetic graphite anode materials. To support growing demand, the company is investing approximately KRW 357 billion to establish a new synthetic graphite anode material plant in Vietnam, which will further expand its production capacity. 

Separately, CNP New Material Technology, a joint venture between POSCO and FINO-CNGR, began construction of an LFP cathode-material plant at the Yeongil Bay General Industrial Complex 4 in Pohang in May. The facility is expected to begin mass production in 2027, with production capacity planned to be expanded in phases to as much as 50,000 tons annually. 

PKX’s Price Performance

Shares of POSCO have gained 8.2% over the past year compared with a 22.5% decline in its industry.

mage Source: Zacks Investment Research

PKX’s Zacks Rank & Other Key Picks

PKX currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the Conglomerates space include Grupo Cibest S.A. CIB, 3M Company MMM and Griffon Corporation GFF. CIB sports a Zacks Rank #1 (Strong Buy), while MMM and GFF carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CIB’s current-year earnings is pegged at $10.87 per share, indicating a 48.7% year-over-year decrease. Its earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, with the average earnings surprise being 12.1%. 

The Zacks Consensus Estimate for MMM’s current-year earnings is pegged at $8.96 per share, indicating a 11.2% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in all of the trailing four quarters, with the average earnings surprise being 4.1%. 

The Zacks Consensus Estimate for GFF’s current fiscal-year earnings is pegged at $5.41 per share. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, with the average earnings surprise being 6.6%. 

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