POSCO Future M Pursues 1.2M Tons of Orders for 2028 Recovery

POSCO Future M aims to secure 1.2 million metric tons of additional battery material supply agreements by the end of 2026, President Eom Gi-cheon said Oct. 29.

Eom announced the commercial target during a press conference at the Battery Industry Day gathering in Seoul. POSCO Future M is South Korea's only domestic producer manufacturing both cathode and anode materials at commercial scale.

The projected additions will lift the company's new supply backlog to 2.7 million metric tons. POSCO Future M has already secured 1.5 million metric tons under multi-year binding commitments since the middle of 2025.

The forthcoming volume involves two or three long-term supply contracts currently under final negotiation, Eom said. The transactions will cover both cathode materials, which dictate energy density, and anode materials, which control charging speeds.

Factory shipments for the prospective contracts will begin during the second half of 2027 at the earliest. Technical qualification and vehicle integration cycles for customized battery active materials typically require two to three years.

Operating rates across production lines will stage a comprehensive recovery starting in 2028, Eom said. Upstream active material suppliers across East Asia have operated below nameplate capacity throughout 2026 due to softer electric vehicle demand.

Domestic cell producers represent the primary transmission channel for POSCO Future M's order expansion. The supplier signed a 1.07 trillion won ($775 million) agreement on Sept. 22 to deliver lithium iron phosphate cathode materials to SK On.

Under that contract, SK On will receive lithium iron phosphate cathodes between 2027 and 2029. The transaction carries a mutual option to extend deliveries for two additional years, marking SK On's first cathode procurement from the firm.

POSCO Future M also formalized a 6 trillion won ($4.35 billion) supply deal with Samsung SDI on Oct. 6. That agreement broadened an earlier supply framework to include lithium iron phosphate chemistry.

The Samsung SDI transaction covers more than 190,000 metric tons of cathode materials scheduled for delivery through 2032. The volume will supply stationary energy storage systems across North American utility grids and standard-range electric vehicles.

Automotive manufacturers across Europe and North America have scaled back electric vehicle targets, shifting procurement toward lower-cost chemistries. That pivot has driven battery makers to seek cheaper alternatives to nickel-heavy formulations.

High-nickel cathodes provide long driving range but require costly cobalt and refined lithium hydroxide. Lithium iron phosphate formulations offer longer cycle lifetimes and lower thermal risks at reduced processing cost.

To satisfy customer demand without heavy capital expenditure, POSCO Future M converted existing ternary production lines at its Pohang complex into iron phosphate manufacturing lines. Line conversion work takes six to seven months.

Line conversion costs remain below 20 billion won ($14.5 million) per 15,000 metric tons of annual capacity. That strategy avoids greenfield plant construction while preparing commercial-scale deliveries of iron phosphate materials before year-end.

The supplier also executed a joint venture agreement with Chinese producer CNGR to construct a dedicated iron phosphate cathode plant. That facility, located in Pohang, targets an eventual operating capacity of 50,000 metric tons.

Upstream material sourcing through parent company POSCO Holdings provides integrated cost advantages. The affiliate supplies iron oxide byproduct from steelmaking facilities and lithium carbonate sourced from brine operations in Argentina.

Eom, who concurrently serves as chairman of the Korea Battery Industry Association, criticized the structure of South Korea's Domestic Production Tax Credit during the Seoul event. The incentive provides tax relief for domestic clean-technology manufacturing.

The domestic credit provides negligible immediate benefit to materials producers that are currently reporting operating losses, Eom said. He urged trade policymakers to implement direct cash refund provisions modeled after Western manufacturing tax incentives.

Without direct refundability, South Korean suppliers cannot monetize tax credits while factory utilization rates remain depressed. Several mid-tier cathode and precursor producers remain cash-flow negative following extended inventory destocking cycles among automotive assemblers.

The Korea Battery Industry Association plans to publish findings from an independent organizational audit in November, Eom said. The trade body will execute structural reforms following government scrutiny regarding research and development labor expenditure accounts.

Securing multi-year supply volumes is vital for spreading fixed facility depreciation across larger commercial production runs. Average plant operating rates across South Korean cathode facilities fell below 50% during the first half of 2026.

Final negotiations for the prospective 1.2 million metric tons of supply agreements are scheduled to conclude by Dec. 31, 2026. Mass-production dispatches under those prospective supply pacts will begin during the latter half of 2027.

POSCO Future M has not published regulatory filings or formal investor relations releases confirming the specific counterparties, transaction values or binding periods for the 1.2 million ton pipeline. The underlying commercial terms remain non-binding until formal signing.