China's total lithium battery black mass production notably declined in September, with the month-over-month (MoM) decline widening from the previous month. According to SMM data, total black mass production for that month was approximately 56,000 metric tons, down about 15% MoM from August. Despite this significant MoM contraction, output remained considerably higher than the same period last year, with overall volumes remaining at a relatively high level.
The production decline was primarily influenced by two factors. First, after the implementation of new regulations related to echelon utilization, industry compliance requirements increased, and some enterprises adjusted their raw material procurement channels, incoming material acceptance, and processing pace accordingly. This adjustment affected the normal production pace in the short term. Second, during the month, some grinding enterprises entered maintenance, suspending external purchases and leading to a staged contraction in output, which directly reduced the overall production for the month. These two factors combined to lower the overall production level in September.
By product, LFP black mass, which accounts for the largest share, saw a notable decrease in output and was the main driver of the overall decline. The drop in its production was partly due to the concentration of enterprises undergoing maintenance and the suspension of external purchases, and partly because LFP scrap suppliers held back from selling, limiting the release of circulating supply in the market. The increased difficulty in obtaining raw materials directly constrained operating rates at the crushing stage, thereby weakening output flexibility.
Ternary black mass production also contracted, though the overall extent was relatively manageable. The volume of scrap ternary batteries circulating in the market was already limited, and with some enterprises scheduling maintenance, output declined accordingly. However, shipments of ternary black mass were relatively smooth, and suppliers showed moderate willingness to sell, so raw material supply did not experience any notable disruption. As a result, the production decline was smaller compared to LFP black mass.
LCO black mass, which accounted for the smallest proportion among the three types, maintained a low-level pattern during the month. Affected by the continued decline in cobalt sulfate prices, trading in the scrap LCO battery market remained mediocre, with buyers and sellers mostly maintaining cooperation through long-term contracts and limited spot orders. Willingness to operate on the crushing side was low, and output remained at a relatively low level, with limited impact on the total volume.
From a cost and price perspective, nickel, cobalt, and lithium chemical prices weakened overall in September, with lithium carbonate and cobalt sulfate both seeing notable declines, while nickel sulfate edged down. Lower selling prices squeezed processing margins on the recycling side, making enterprises more cautious in raw material procurement and production scheduling. The pace of external purchases slowed down, further suppressing the expansion of black mass output.
Looking ahead, as enterprises that underwent maintenance gradually resume production and restricted capacity is progressively released, black mass output has a foundation for recovery. However, raw material prices are currently fluctuating significantly, and selling prices and processing margins on the recycling side remain unstable. Enterprises are generally cautious about production and external purchases, and the pace of production recovery remains uncertain. LCO black mass, dragged down by weak cobalt sulfate prices, is unlikely to reverse its low-level operating pattern in the short term, and the structural divergence across the industry is expected to persist. Going forward, close attention should be paid to the resumption progress of enterprises under maintenance, scrap circulation conditions, and the impact of raw material price trends on production.
