Commodities Comment

Research evidence excerpt

Commodities Comment

Making sense of the strong growth in raw materials consumption in batteries this year

The battery sector is a sector of growing importance for lithium, nickel and cobalt and is dominated by China. In today's

report we summarise the developments in the all-important Chinese battery market, where demand so far in 2026 has been

surprisingly strong, despite the slowdown being experienced in global EV sales.

The first half has seen remarkable growth in the use of lithium, nickel and cobalt in batteries. Using data for China In Figure 1

(which accounts for 85-90% of global use), we calculate that year-to-date growth in nickel and cobalt use in making ternary

precursors (pCAM) is up 37% and 30% YoY respectively, while lithium use in NCM/NCA cathode (for EVs) is up 51% YoY, Even

stronger, is the growth in lithium use in LFP cathode (lithium iron phosphate) which was reported to have growth by 66%

YoY in January to May. LFP batteries are used not just in electric vehicle batteries bur also in BESS (battery energy storage

systems), a rapidly growing sector.

Figure 2 - Strong growth in Chinese use of Li/Ni/Co Figure 3 - Major mismatch in Jan-May 2026 growth

in making first-stage battery materials in Jan-May between first and final stages in use

Source: ICC Sino, Macquarie Strategy, July 2026

Source: ICC Sino, Macquarie Stragey, July 2026

While the lithium growth rates are not that surprising in BESS, the rate of growth in nickel and cobalt use seems anomalous,

especially when compared with the slower growth in EV sales and deployment of nickel and Cobalt in EV batteries (Figure's 2

and 3). The reason why there is any growth in deployment is due strong growth in EV sales in Europe (up over 25% YoY in Jan-