(Yicai) Oct. 9 -- Longpan Technology’s shares trimmed a large early gain made after the leading Chinese producer of lithium iron phosphate cathode materials announced a major five-year order from a unit of automotive giant Geely Holding Group that could generate sales of as much as CNY25.6 billion (USD3.82 billion).

After climbing by almost 9 percent in Shanghai this morning, Longpan Technology [SHA: 603906] walked back most of that increase to close up 0.6 percent at CNY21.07 (USD3.15) per share.

Nanjing Liyuan Nano Technology, an indirectly held subsidiary of Longpan Technology, has signed an agreement with Zhejiang Jiyao Tongxing Energy Technology to supply it with 378,600 to 567,800 tons of LFP cathode materials between 2026 and 2030, its Nanjing-based parent company announced late yesterday. Actual volume will be determined by subsequent purchase orders, it said.

Longpan Technology added that apart from this agreement, it was not aware of any other recent material developments that could explain significant moves in the company’s share price. Prior to today, the stock had risen by its 10-percent daily trading limit for two straight trading sessions.

The company did not estimate the value of the order, noting only that product prices would be confirmed monthly based on agreed terms. If supply-and-demand conditions in the new energy and advanced materials markets change significantly during the period, the two parties will renegotiate prices, it said. The firm did not reveal any further details of the project.

Using an estimated average selling price of CNY45,023 (USD6,722) per metric ton -- calculated based on LFP cathode material sales revenue and volume disclosed in Longpan’s most recent earnings report -- the upper end of the agreed supply volume could generate about CNY25.6 billion in sales.

Lopal Technology said the agreement and its implementation would help establish a long-term, stable relationship with a downstream customer, strengthen its competitiveness in new energy battery materials and have a positive impact on its future business performance.

Jiyao Tongxing Energy is a battery unit of privately held Geely. Its products are used primarily in new energy vehicles within the Geely group. In May last year, the company announced a strategic target of reaching 70 gigawatt hours of annual battery production capacity by next year, covering both power packs for vehicles and energy storage systems.

In the first eight months of this year, Jiyao Tongxing Energy’s cumulative installed power battery capacity in vehicles reached 11.7 GWh, according to figures from the China Automotive Power Battery Industry Innovation Alliance. It had a 2.4 percent share of the domestic market, ranking ninth among battery manufacturers in China.

Editor: Tom Litting