(Lin Ziya) SMM: Analysis of Profitability in China's Lithium Battery Recycling and Opportunities and Challenges Under Policy Reforms [New Energy Summit]

At the 2025 (10th) New Energy Industry Expo - Lithium Battery Recycling Forum hosted by SMM Information & Technology Co., Ltd., Lin Ziya, SMM's lithium battery recycling industry analyst, discussed the theme of "Breaking Through 2025: Profit Analysis of China's Lithium Battery Recycling, and Opportunities and Challenges under Policy Reforms." She stated that driven by the global carbon neutrality process, the power and energy storage markets are experiencing explosive growth, and the demand for lithium batteries remains optimistic, although the marginal growth rate is slowing. Considering cost and safety issues, the penetration rate of the LFP system will continue to steadily increase globally. Currently, China's recycling market is still in a stage of overcapacity, gradually achieving capacity clearance.

Recycling Market Overview and Global Scrap Battery Market Size
Global Lithium-ion Battery Recycling Scale Determination Method
The new energy market maintains a growth trend, but the marginal growth rates of both the power and energy storage sectors are gradually slowing.
SMM expects the global NEV sales CAGR to reach around 9% from 2025 to 2028.
Analyzing the factors influencing the growth of the NEV market in China, North America, and Europe, in China, it is mainly supported by the trade-in policy; in North America, the NEV market is hindered by the US tariff hike, which has increased the prices of new energy-related products and raw materials, raising costs and impeding long-term new energy development; in Europe, the development of the NEV market is primarily driven by carbon emission assessments.
In the energy storage market, SMM expects the CAGR of the energy storage market to reach around 16% from 2024 to 2028.
Analyzing the factors influencing the growth of the NEV market in China, North America, and Europe, in China, it is mainly driven by power market reform and new-type energy storage demand; in North America, the NEV market is hindered by the US tariff hike, which has increased the prices of new energy-related products and raw materials, raising costs and impeding long-term new energy development; in Europe, the Renewable Energy Directive RED III aims to increase the share of renewable energy in the EU's final energy consumption to 42.5% by 2030.
Global Theoretical Lithium-ion Battery and Recyclable Metal Content
According to SMM, currently, end-of-life batteries mainly come from production waste; after 2028, the theoretical recyclable metal content from scrapped batteries will gradually exceed that from production waste.
SMM expects that from 2024 to 2030, the global CAGR of theoretical lithium-ion battery recycling from social end-of-life is expected to reach around 48%, from production waste around 14%, and from inventory end-of-life around 8%.
In terms of global theoretical recyclable metal content, by 2030, the recyclable metal content from social end-of-life is expected to reach around 1.06 million mt, from production waste around 670,000 mt, and from inventory end-of-life around 66,000 mt.
Current Status of China's Lithium Battery Recycling Market: Profit and Production
Overview of China's Recycling Industry - Market Status
According to SMM data, the volume of black mass from scrap lithium battery recycling in China is expected to increase YoY for three consecutive months in February, March, and April this year compared to the same period in 2024.
Value Breakdown of Different Types of Uncrushed Scrap Products
Currently, the main product after processing scrap batteries and pole pieces is black mass, accounting for about 57% of the value of different types of batteries.
According to SMM analysis, the current market for scrap battery cells and pole pieces is still priced by weight, with buyers and sellers negotiating a lump sum (yuan/mt), with black mass, copper powder, and aluminum powder constituting the main cost of scrap battery cells, thus the price of black mass is strongly correlated with the price changes of copper and aluminum in scrap material costs.
Profit and Cost of Externally Purchased Uncrushed Scrap in the Downstream of the Power Battery Recycling Industry Chain - Powdering End
China's Secondary Nickel, Cobalt, and Lithium Salt Capacity, Production, and Forecast (2022-2025E)
The supply proportion of secondary metals is still relatively low, but as the tide recedes and ESG regulations tighten, the recycling proportion will steadily increase.
SMM expects that by 2026, China's secondary nickel sulphate capacity is expected to exceed 200,000 mt/year, with production expected to reach around 100,000 mt; from 2025 to 2026, the supply proportion of secondary nickel sulphate is expected to remain between 15% and 20%;
In terms of secondary cobalt sulphate, it is expected that by 2026, China's secondary cobalt sulphate capacity is expected to exceed 80,000 mt/year, with production expected to reach around 20,000 mt/year; by 2026, the supply proportion of secondary cobalt sulphate is expected to approach 25%;
In terms of secondary lithium carbonate, it is expected that by 2026, the capacity of secondary lithium carbonate is expected to approach 600,000 mt, with production expected to reach around 100,000 mt; from 2024 to 2026, the supply proportion of secondary lithium carbonate will continue to increase, and by 2026, it is expected to approach around 25%.
Profit and Cost of Externally Purchased Black Mass in the Downstream of the Power Battery Recycling Industry Chain - Wet Process End
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According to SMM analysis, from November 2024 to March 2025: Due to the previous destocking of lithium carbonate, the price of lithium carbonate slightly increased, temporarily repairing the profit of wet-process LFP scrap. However, with the resumption of production at Ningde mines after the holiday leading to a surplus in lithium carbonate supply and demand, lithium salt prices continued to decline, and LFP scrap showed a continuous inversion.
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From November 2024 to March 2025: Due to the previous decline in nickel sulphate and cobalt sulphate prices, the profit of wet-process ternary and LCO scrap continued to invert, but due to the DRC's restrictions on the import and export of cobalt intermediate products, cobalt salt prices surged, repairing the profit of ternary and LCO scrap, with LCO scrap profit above the surplus line.
Analysis of China's Lithium Battery Recycling Industry Policies
Recycling Industry: Both the EU and North America are in the initial stage, while China's recycling market is entering a critical period
China's Vehicle Recycling Subsidy - Trade-in Policy
The national "trade-in" policy for the automotive industry, followed by local policies, aims to stimulate sales through vehicle upgrades and increase the recycling volume of scrapped vehicles.
China's Black Mass Policy - Policies on the Import of Recycled Black Mass for Lithium-ion Batteries
In 2025, the country released a draft for comments on the "black mass import and export" policy, with comments closing on March 20. The draft specifies various index requirements for black mass.
According to SMM analysis, qualified lithium-ion battery recycled black mass is not considered solid waste and can be freely imported. Black mass should not be mixed and should be classified. The index requirements in the black mass import and export specifications are consistent with the Class II black mass requirements in "GBT 45203-2024 Lithium-ion Battery Recycled Black Mass." In October 2024, the EU released a "Draft Revision of the Waste List," adding waste residues and intermediate products from the recycling of waste lithium batteries and nickel batteries as hazardous substances. After the revision is passed, the export of hazardous waste to non-OECD countries, including Southeast Asia and China, will be prohibited.
Lithium Battery Recycling Policy White Paper, Covering Policy Standards for All Players in the Lithium Battery Recycling Process
Summary
End-use Demand:
Driven by the global carbon neutrality process, the power and energy storage markets are experiencing explosive growth, and the demand for lithium batteries remains optimistic, although the marginal growth rate is slowing.
Considering cost and safety issues, the penetration rate of the LFP system will continue to steadily increase globally.
China's Recycling Market:
Integration is gradually deepening, and with the increase in social end-of-life and battery cell production schedules, the total procurement volume and output of market scrap are gradually increasing.
Profit: The profit of the wet process end has long been below the surplus line, and the powdering end is slightly better than the wet process but still shows inversion.
Recycling Policies:
Newly introduced policies such as trade-in, black mass import and export, and black mass specification requirements have become the focus of attention.
Capacity allocation in regions such as the EU and North America is still uneven, mainly concentrated in the front-end powdering pretreatment.
Opportunities and Challenges:
With the large-scale social end-of-life wave and the opening of black mass import and export, black mass supply will gradually increase.
Currently, China's recycling market is still in a stage of overcapacity, gradually achieving capacity clearance.
Click to View the 2025 (10th) New Energy Industry Expo Special Report