【SMM Analysis】In-Depth Review of H1 2025 Lithium Battery Recycling Market and H2 Outlook (1)

I. Price Review

Lithium Battery Recycling:

January-February: Pre-holiday stockpiling led to oscillating prices.

In January, the price of spent lithium batteries overall moved within a range. As battery scrap prices remained firm, production costs for hydrometallurgical plants continued to be inverted, leading to no large-scale pre-holiday stockpiling demand; procurement was mostly for order-based, rigid demand. Due to the impact of the Spring Festival holiday in February, with breaks expected to last until around the Lantern Festival for some small and medium-sized crushing plants and traders, the circulation volume of scrap in the market decreased, resulting in thin trading. Prices for salts like sulfuric nickel and sulfuric cobalt remained basically stable in terms of demand, while lithium carbonate prices experienced a slight decline. As lithium salt prices fell while the price of black mass required for production remained temporarily stable, the cost inversion for some LFP recycling enterprises worsened, leading them to adopt a wait-and-see attitude.

March: Cobalt prices rose driven by DRC policies, coupled with downstream stockpiling, leading to sustained price increases.

Overall data shows that spent lithium battery prices in March were mainly on an upward trend. Specifically, ternary and pure cobalt scrap prices rose along with salt prices in the first and middle ten days, while LFP prices saw a small increase followed by a gradual decline. Lithium carbonate supply remained strong; from the raw material perspective, lithium carbonate inventory continued to accumulate, and spot prices fell persistently amid a sustained surplus pattern. Cobalt prices rose rapidly in the first and middle ten days of March due to the suspension of cobalt exports from the Democratic Republic of Congo. Simultaneously, higher cobalt coefficients for MHP also increased nickel salt costs, ultimately driving up nickel prices. However, after the middle and late ten days, nickel and cobalt prices did not maintain their upward trend, showing a slight gradual decline. In the first and middle ten days, crushing plants and traders, influenced by rising nickel and cobalt salt prices, actively supported prices from the supply side. By the middle and late ten days, even as salt prices declined gradually, their psychological price levels did not drop, leading them to continue supporting prices for ternary and pure cobalt scrap. Similarly, for LFP, the lithium point quickly followed the slight rise in lithium carbonate in early March to support prices, but declined slowly during the middle and late ten days when lithium salt prices fell.

April-June: Nickel, cobalt, and lithium salt prices oscillated, and pricing power for recyclers gradually shifted downstream.

In recent months, recycling market prices have mainly followed salt prices, oscillating. Overall data indicates that ternary, lithium cobalt oxide black mass, and LFP scrap all faced continued pressure due to the downward cycle of lithium salts, with the decline in the lithium point for LFP black mass being particularly significant. The lithium carbonate market maintained a pattern of strong supply and weak demand after mid-May. From the raw material perspective, uncertainty surrounding US tariff policies on China continued to suppress market sentiment, coupled with the nearing end of the domestic downstream stockpiling cycle, leading to continued weak oscillations in prices. Sulfuric nickel producers maintained a sales-to-production strategy, keeping nickel salt prices stable, while cobalt salt prices saw reduced linkage effects due to improved African raw material supply and slow domestic inventory drawdown. Against the backdrop of nickel, cobalt, and lithium salt prices continuously seeking bottoms, most hydrometallurgical plants opted for conservative operating strategies on the demand side, especially LFP hydrometallurgical plants, which significantly reduced the frequency of external black mass procurement, with some production lines shifting to maintenance or output reduction modes. Industry inventory digestion currently relies mainly on internal consumption. Pessimistic market expectations for lithium salt prices led to cautious purchasing behavior for LFP black mass, with overall trading activity remaining low.

Cascaded Use:

January-February:

Approaching the Spring Festival month, the cascaded use market saw weak supply and demand, with prices generally holding steady. On the supply side, due to the Spring Festival holiday impact, energy storage and power cell production were in the traditional off-season for battery manufacturers, coupled with fewer working days in February, resulting in a slight month-on-month decrease in the output of both Grade A and Grade B cascaded use cells from production. From the market demand perspective, some cascaded use factories also had extended holidays during the New Year period, only resuming production around the Lantern Festival. Additionally, with safety stockpiles prepared before the holiday, the market overall still showed a situation of oversupply.

March-June:

Overall data shows that the cascaded use market continued its quiet trend from March to June. Prices for Grade B cascaded cells held steady with a slight short-term decline, while Grade A cell price fluctuations were closely related to nickel, cobalt, and lithium salt prices and supply conditions. Currently, the cascaded use market still maintains profit margins in the disassembly/crushing and hydrometallurgical processing stages. However, massive inventory reduction by cell factories in the earlier period led to an oversupply of Grade B cells, keeping prices balanced amidst upstream cell factories' efforts to support prices and downstream cascaded use factories' cautious procurement. On the demand side, cascaded use enterprises generally held a pessimistic view on future prices, only conducting essential restocking. Affected by global tariff policies, overseas export demand was somewhat suppressed. However, as the US cell market accounts for a relatively low share, domestic market supply was relatively sufficient. Furthermore, with ongoing bus battery replacement projects across various regions, the supply of Grade B cells grew slowly, lacking momentum for price increases.

II. Procurement Volume Review

According to SMM research, the total supply of lithium battery recycling materials in China from January to June 2025 was 132,000 tons, based on the conversion to black mass caliber, representing a 2% year-on-year increase compared to 129,000 tons in the same period last year. Breaking down by raw material type, the total recycling volume of ternary scrap from January to June 2025 was 52,000 tons, a 30% year-on-year increase compared to 40,000 tons in the same period last year. For LFP scrap, the total recycling volume was 76,000 tons, a year-on-year decrease of approximately 10%. For lithium cobalt oxide scrap, the total recycling volume was 4,000 tons, a year-on-year increase of approximately 50%.

Looking at the recycling volume in the first half of the year, trading in the recycling market was relatively thin at the beginning of the year. Most enterprises had low overall production enthusiasm due to the long-term inversion of the black mass coefficient in the industry. Furthermore, as industry expectations for the prices of certain downstream products were pessimistic at that time, most hydrometallurgical plants were unwilling to transact black mass at high coefficients and preferred to purchase after the holiday. There was almost no batch trading of black mass or electrode scraps in the market.

Overall data analysis shows that market procurement in March 2025 increased compared to February 2025. On the demand side, production in the power and energy storage segments steadily increased. Inventory consumption before the New Year was relatively significant for most hydrometallurgical plants, leading to an increase in procurement activity. Additionally, the longer working period in March compared to the previous month contributed significantly to the noticeable recovery in overall market demand in March. On the supply side, battery factories maintained a clear sentiment to support prices. In early March, nickel, cobalt, and lithium salt prices rose by varying proportions, and battery factories and traders quickly adjusted their prices accordingly. In the middle and late ten days of March, even as salt prices declined gradually, battery factories and crushing plants did not reduce prices, leveraging the recent high nickel and cobalt prices to maintain high scrap prices. From a material perspective, the price of sulfuric cobalt continued to rise rapidly in the first and middle ten days of March due to the policy banning cobalt salt exports from the DRC. The rise in sulfuric cobalt prices further fueled the price-supporting sentiment among MHP sellers, pushing up the cost of sulfuric nickel and causing its price to also rise in the first and middle ten days of March.

Overall data analysis shows that market procurement in May-June 2025 decreased compared to April-May. On the demand side, most hydrometallurgical plants opted for a semi-halted state as nickel, cobalt, and lithium salt prices continued to fall. Most ternary and LFP hydrometallurgical plants reduced procurement volumes during this period, only consuming basic inventory. The market remained very cautious about purchasing LFP black mass due to a pessimistic outlook on future lithium salt prices, resulting in very thin market trading. Procurement was expected to gradually resume in June as hydrometallurgical plant inventories decreased. On the supply side, the psychological selling prices of crushing plants and traders showed some relaxation as salt prices continued to fall. Black mass prices basically followed salt prices downward, but the rate of decline was still slower than that of salt prices. Furthermore, as the profit margin for the crushing process remained below the break-even line for some crushing plants, they simply chose to hold back shipments, waiting for a subsequent market recovery, leading to thin market trading.