Supply Chain: Upstream and Midstream

Building Regional Midstream Supply Chains in Europe and North America Remains a Challenge There is a significant shortage of precursor (pCAM) in Europe and North America, leading cathode active material CAM) producers to be heavily reliant on imports. This can raise production costs and increase supply chain complexity, which is passed through to cell manufacturers. A supply shortage also exists for CAM when compared to its first-use demand in battery cell production in Europe and North America, highlighting a strong, structural mid-stream deficit in Western markets. In 2025, many of the South Korean CAM operations that supplied the US market manufactured CAM using pCAM imported from China. There is a particular shortage of LFP pCAM (iron phosphate) and CAM projected in both regions, where a heavy dependence on China for precursor material will remain. Chinese producers benefit from a highly integrated and mature supply chain further upstream, meaning supply is plentiful and quality standard is high. This presents some key challenges for European and North American markets given a desire for low-cost EVs in these regions. If a desire to move away from Chinese involvement remains, then more must be done to overcome this deficit. The mid-stream suffers from notoriously tight margins and typically exhibits shorter contract, resulting in more limited visibility of future volumes and cashflow. Appetite for investment is therefore often far reduced compared with the more downstream, value-add areas of the lithium-ion battery supply chain.

Source: Project Blue

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