When exactly will the economies of scale for lithium sulfide be realized?
A 100-ton pilot line for lithium sulfide has been built, yet companies are still considering whether to put it into production.
In July this year, Yu Jinqiu, General Manager of Anshi Guli, a subsidiary of Shanghai Emperor of Cleaning Hi-Tech (ECG), revealed that the company's newly built 100-ton pilot line was expected to be ready for production that month. However, he remained cautious about whether to officially commence production.
The reason is insufficient market demand.
Three months later, Yu Jinqiu provided another set of attention-grabbing cost reduction forecasts.
On October 15, he stated that when lithium sulfide production reaches a scale of 10,000 tons, the price is expected to drop to CNY 500,000 per ton; when it reaches 100,000 tons, it could further decrease to CNY 250,000 per ton.
Yet in late September, the market reference average price for battery-grade lithium sulfide was still around CNY 1.3 million per ton.
An even larger gap lies in production scale.
Data indicates that in the first eight months of 2026, China's cumulative production of battery-grade lithium sulfide reached 52.9 tons, a year-on-year increase of 184%, with the full-year production still estimated to be only 85 to 95 tons.
Hundred-ton-level production lines are being launched one after another, and cost reduction calculations for 10,000-ton-level production have already begun, yet the actual annual output of the entire industry remains below 100 tons.
The time gap between capacity construction and downstream demand is becoming a practical test for the industrialization of lithium sulfide.
Upstream material companies have begun preparing for scaled manufacturing, but downstream sulfide electrolytes and all-solid-state batteries are still in the engineering validation stage, and industrial procurement has not yet reached scale.
More challenging, the manufacturing process, cost, and stable supply capability of lithium sulfide also need to be fully validated through larger-scale and longer-cycle actual production.
Production capacity has moved forward, but the technical and commercial conditions supporting scaled manufacturing have not yet matured in sync.
Production Lines Built for Hundreds of Tons, Procurement Still Dominated by R&D and Pilot Trials
Based on corporate disclosures, lithium sulfide has made substantial industrial progress.
Ganfeng Lithium is one of the earlier companies to achieve actual supply.
The company's 2025 annual report disclosed that the battery-grade lithium sulfide production line is gradually releasing capacity. The product's main content is not less than 99.9%, and the particle size D50 is not greater than 5μm. It has passed customer quality certification and is being supplied to multiple downstream customers.
Xtc New Energy Materials has also made significant progress this year.
The 2026 semi-annual report shows that the company's high-purity lithium sulfide has entered the trial production stage, achieving continuous preparation with stable quality, and has passed the evaluation and verification of multiple leading customers.
The pilot production line for lithium sulfide and solid electrolytes at Tianci Materials has also been completed and entered the trial production stage in the third quarter.
Tianqi Lithium is building a 50-ton/year lithium sulfide pilot project to advance the engineering validation of its independent preparation process and specialized equipment.
From lithium salts and fine chemicals to battery materials, companies with different industrial manufacturing foundations have successively entered the industrialization stage of lithium sulfide.
Some companies have achieved actual sales and customer certifications, some have begun continuous production, and more pilot capacity is being formed.
However, the advancement in industrial production capacity has not yet been translated into industrial supply of a corresponding scale.
On one hand, hundred-ton-level production lines are being completed one after another; on the other hand, the actual monthly output of the entire industry is less than 10 tons.
This contrast is sufficient to illustrate that the industrialization of lithium sulfide is crossing into a new stage.
Over 50 Customers, Why Can't They Support a 100-Ton Production Line?
In July this year, Yu Jinqiu disclosed that the company has served over 50 customers, with cumulative sales of lithium sulfide exceeding 30 tons. The original 20-ton experimental line and 20-ton pilot line are operating stably, and the newly built 100-ton pilot line has also been completed.
Despite having actual sales and dozens of customers, the company still needs to consider whether to put the new production line into operation immediately.
Guanghua Technology is also facing order tests. The company already has a production capacity of 300 tons/year and was still undergoing customer validation in July. In August, the company responded again that lithium sulfide products have been launched into the market, and capacity, validation, and orders are progressing as planned.
Both companies have established production capacity and a customer base, yet orders have not kept pace with the rhythm of capacity construction.
Looking deeper, the upstream has prepared capacity on the scale of industrial manufacturing, while the downstream is still mainly procuring materials at the pace of R&D and pilot trials. However, only when procurement shifts from phased testing to continuous production will there be sufficient conditions for the full release of hundred-ton production lines.
Currently, the main purchasers of lithium sulfide are still in the stages of sulfide electrolyte development, all-solid-state cell testing, and pilot manufacturing.
Statistics indicate that in the first eight months of this year, China's cumulative production of sulfide electrolytes was about 70 tons, a year-on-year increase of 119.7%, but the capacity utilization rate in August was only 5.82%.
Material demand is growing, but the actual manufacturing scale remains limited.
Even after entering a customer's supply chain, lithium sulfide companies need to continuously complete product adaptation and validation.
Guanghua Technology previously made it clear that lithium sulfide is a non-standard product and needs to be customized according to customer requirements.
Yu Jinqiu also mentioned that as downstream development deepens, customers' focus on lithium sulfide has extended from indicators such as purity and crystal phase to moisture, oxygen, metal impurities, particle size, and batch consistency.
Different sulfide electrolyte formulations and preparation processes may have varying requirements for raw materials. Material suppliers need to refine their products through sample submission, feedback, and continuous validation.
Apart from the time required for technical validation and adaptation, more fundamentally, downstream all-solid-state batteries have not yet entered the stage of large-scale manufacturing.
Even if lithium sulfide products have passed customer validation, the current procurement volume may not necessarily support the continuous operation of hundred-ton or thousand-ton-level production lines.
This mismatch in maturity between upstream and downstream will again affect the engineering process of lithium sulfide in the next stage.
Production Volume Fails to Rise, Costs Hard to Truly Come Down
To bring down the price of lithium sulfide, what is needed is not only better preparation processes but also a sufficiently large actual production scale.
Anshi Guli calculated an account in July this year.
Assuming a lithium sulfide company has annual labor costs of CNY 10 million and sells only 10 tons of products throughout the year, then each ton of lithium sulfide would need to bear CNY 1 million in labor costs.
This does not even include raw materials, equipment, and other expenses.
If sales volume expands to 100 tons, even if the company's total expenses increase, the fixed costs allocated per unit of product are still expected to decrease significantly.
However, the current market precisely lacks industrial orders to support this scale.
Lithium sulfide companies have already invested in equipment, personnel, and R&D resources, yet the production lines struggle to operate continuously at high loads, making it difficult to fully amortize fixed costs.
At the same time, high raw material costs will increase the manufacturing costs of downstream sulfide electrolytes and all-solid-state batteries.
The upstream needs downstream orders to release economies of scale, while the downstream needs more economical and stable raw material supply.
This makes the scaled cost reduction of lithium sulfide increasingly dependent on the commercialization progress of the entire industrial chain.
Moreover, the lack of production scale also affects another important task: the full validation of the industrial economics of different manufacturing processes.
In his speech on October 15, Yu Jinqiu emphasized again that there are currently numerous technical routes for lithium sulfide production, and the industry has not yet converged.
Different processes vary in raw material consumption, reaction yield, equipment investment, energy consumption, and safety and environmental protection costs.
These differences need to be further validated through actual production.
The fact that laboratories can prepare high-purity products and that tens-of-tons-level pilot lines can operate stably does not mean that future thousand-ton or ten-thousand-ton-level production will have the same cost competitiveness.
Continuous production is not only a condition for amortizing costs but also an important process for testing process stability, equipment reliability, and actual manufacturing costs.
Therefore, the impact brought by insufficient orders has gone beyond short-term capacity utilization rates and corporate profitability issues.
It will also affect the accumulation of industrialization experience for lithium sulfide and the validation of the economics of future large-scale production.
This is precisely the more profound aspect of the current industrialization contradictions of lithium sulfide.
Before 10,000-Ton-Level Cost Reduction, Who Dares to Expand Capacity in Advance?
Against this backdrop, lithium sulfide companies are beginning to face more complex investment choices.
On one hand, once sulfide all-solid-state batteries enter scaled application in the future, the demand for lithium sulfide is expected to grow significantly. Companies that complete process development, pilot validation, and capacity preparation in advance may gain cost and delivery advantages.
On the other hand, current technical routes have not yet converged, and downstream industrial orders have not been released on a large scale. Building thousand-ton or ten-thousand-ton-level fixed capacity too early may not only face equipment idleness but also require bearing the investment risks brought by future changes in technical routes and adjustments in product requirements.
The price forecasts proposed by Yu Jinqiu of CNY 500,000 per ton at the 10,000-ton level and CNY 250,000 per ton at the 100,000-ton level demonstrate the potential cost reduction space for lithium sulfide in the future.
However, there is still a huge scale gap compared to today's estimated annual production of less than 100 tons.
Bridging this gap requires the upstream to continuously improve processes and reduce costs, as well as the downstream sulfide electrolytes and all-solid-state batteries to generate sufficient industrial procurement demand.
Based on the progress of multiple companies mentioned earlier, lithium sulfide is transforming from an R&D material to an industrial raw material.
However, as initial production capacity is established, the industrialization process is increasingly affected by the combined manufacturing rhythms of both upstream and downstream.
In the future, what is truly worth attention will be the actual operating load of production lines, qualified output, the scale of continuous customer procurement, and whether unit manufacturing costs can steadily decline as production scale expands.
These indicators will better reflect the actual progress of lithium sulfide moving from pilot trials to mature industrial supply.
At present, the capacity construction of lithium sulfide has already begun to outpace market demand.
What will determine the speed of industrialization in the next stage is whether lithium sulfide companies can complete process and cost validation in continuous production, and when the downstream all-solid-state battery industry can provide industrial orders sufficient to support scaled manufacturing.
Moving from hundred-ton pilot trials to ten-thousand-ton-level manufacturing, what lithium sulfide must cross is already an engineering test involving joint participation from both upstream and downstream.