【SMM Analysis】Used Battery Cell Market in July 2026: Low Acceptance of High Prices Drives Market to Drift Lower

In July 2026, China’s scrap power battery cell market continued to drift lower overall, with clear divergence across subcategories: scrap ternary and LCO battery cells pulled back persistently, while scrap LFP battery cells fluctuated in tandem with lithium carbonate prices. The market’s underlying logic shifted notably during the month. The previously chronic tight-supply premium and the lagged decline in cell prices gradually eased, as upstream-to-downstream price transmission improved significantly. Weakening raw material costs and soft downstream demand exerted downward pressure from both sides, driving the price center of the scrap battery cell market steadily lower, with overall cautious trading sentiment across the industry.

Reviewing market operation characteristics in H1, due to the fact that power batteries had not yet entered a centralized retirement peak, the circulating supply of domestic scrap battery cells was generally tight, and a raw material supply gap persisted in the long term. Grinding enterprises routinely faced procurement difficulties, and the premium on industry purchases remained prominent. Against this backdrop, during the downward phase of lithium battery chemical prices in H1, scrap battery cells, supported by tight supply, declined to a lesser extent than upstream nickel, cobalt, and lithium chemicals, exhibiting strong price resilience and a notable inertia in upstream-to-downstream cost transmission. After entering July, this market pattern improved somewhat but was not completely reversed. The core reasons were that nickel, cobalt, and lithium chemicals showed an overall broad decline during the month, with the cost side continuing to loosen; meanwhile, downstream hydrometallurgical enterprises displayed generally sluggish acceptance of purchasing high-priced ternary and LCO black mass, and weak demand was transmitted upstream step by step, causing grinding enterprises' willingness to purchase scrap battery cells at high prices to further pull back. The atmosphere for high-price transactions in the market was sluggish. Under these dual impacts, the linkage by which falling raw material prices drove down battery cell prices began to strengthen in the month, and the price support provided by raw material premiums continued to weaken. The market-based pricing characteristics of scrap battery cells became increasingly evident, and the previous situation, where battery cells resisted price declines and cost transmission was sluggish, was effectively alleviated.

Cost side, in July, the lithium battery raw material market weakened across the board, with prices of lithium carbonate, nickel sulphate, and cobalt sulphate pulling back in tandem, providing the core driver for the downturn in the used battery cell market. The price center of raw materials continued to move lower, directly depressing the valuation centers of used battery cells and recycled black mass, and thoroughly breaking the price floor support previously provided by supply tightness. Compared with the H1 pattern of raw material price fluctuations and strong battery cell resilience, the bearish raw material factors in July were fully transmitted downstream to the used battery cell segment, leading to more thorough market price adjustments and a continuous return of industry valuation to fundamentals.

The demand-side transmission chain continuously weakened. This round of weakness originated from the downstream material segment of hydrometallurgical enterprises, where end-user material plants generally showed low acceptance of high-priced raw materials. Industry-wide losses persisted, directly causing climbing shipment pressure and a somewhat weakened willingness to sell for hydrometallurgical enterprises' finished products, which in turn suppressed upstream purchase willingness for black mass. This month, China's hydrometallurgical enterprises exhibited cooling enthusiasm in purchasing high-priced ternary and LCO recycled black mass, with procurement pace slowing down, strong sentiment in pushing for lower prices, and difficulties in closing high-priced black mass deals. The end-user sentiment of pushing for lower prices transmitted upward step by step, directly leading grinding enterprises to adopt a more conservative purchasing mentality, with willingness to purchase at high prices continuing to pull back. The sluggish atmosphere for high-priced used battery cell transactions persistently eroded the price support for ternary and LCO battery cells, serving as the core driver of the continued weakness in these two categories this month.

By product category, performance diverged significantly this month. Ternary and LCO spent battery cells were dragged down by both falling nickel and cobalt raw material prices and sluggish downstream demand, leading to a continued price decline. Market supply mainly consisted of low-priced rigid-demand transactions, while high-priced supply found no buyers, fully opening the downward trajectory for prices. The LFP spent battery cell market was deeply linked to lithium carbonate prices, consolidating along with lithium price fluctuations and remaining in the doldrums overall. Although the LFP market was under pressure as well, industry fundamentals still showed differentiated characteristics. Domestic grinding enterprises maintained a strong sentiment of holding back from selling. To lock in profits and avoid selling at a loss due to low prices, they prioritized fulfilling long-term agreement orders, while the willingness to sell actively in the spot market remained sluggish.

Overall, in July, raw material prices weakened across the board, and high-price transactions in the recycling sector ebbed across the board. The pullback in raw material prices drove the overall market downward, while the support from long-standing supply-side premiums somewhat faded. The industry's price transmission mechanism is expected to return to normal. Looking ahead, in the short term, the price trends of lithium battery raw materials will continue to dominate the market conditions for used battery cells. The weak pattern for ternary and LCO battery cells may persist; LFP used battery cells will continue to fluctuate with lithium carbonate prices. Meanwhile, grinding enterprises' strategy of holding back from selling and prioritizing long-term contract shipments will continue to affect the fluctuation range of spot market prices. The overall industry is likely to maintain a trend of consolidating on a subdued note.