Positive News Boosted Power Battery Recycling Sector Significantly

SHANGHAI, Aug 1 (SMM) - Stocks in the power battery recycling sector advanced rapidly after today's opening, with an increase of more than 4% at one point. Specifically, Dcenti hit daily limit, Narada Power rose more than 17%, and other stocks such as Huayou Cobalt, CNGR, Guanghua Sci-tech, and Camel Group all climbed more than 6%.

On the news front, the Ministry of Industry and Information Technology (MIIT), the National Development and Reform Commission and the Ministry of Ecology and Environment jointly issued the Implementation Plan for Carbon Peaking in the Industrial Sector, which advocate establishing a power battery recycling system for NEVs. In addition, the Plan also stated that it is necessary to improve laws and regulations by formulating and introducing rules such as the measures to supervise and manage industrial energy conservation, to manage the remanufacturing of mechanical and electrical products and to manage the NEVs power battery recycling. The positive news stimulated the power battery recycling sector to rise rapidly, with many individual stocks increasing significantly. As a matter of fact, the power battery recycling has been a hot topic recently. On July 21, the vice minister of MIIT said in an open speech that China has established a preliminary power battery recycling system that needs further improvement. Efforts will be sped up to formulate regulations to manage power battery recycling, enhance the cooperation between central and local governments and establish a coordinated supervision mechanism. In addition, supports will be provided to technical research of critical technologies such as smart dismantling and material regenerating as well as to the development of related enterprises repurposing used power batteries. According to an industry insider, the power battery recycling industry is booming. As the NEVs owership keeps growing higher, while the raw material costs of power battery sustained rising, the value of battery recycling will improve significantly, which helps to bring about a huge market. According to SMM previous research, in the first half of 2022, a total of 131,446 mt of waste lithium batteries was recycled in China (including  scraps such as battery black mass and pole plate). The increase in recycling mainly occurred in January and June. In January, the companies rushed to purchase waste lithium batteries to build stocks for the production after Spring Festival holiday. In June, the enterprises stocked up a large number of raw materials because the demand for nickel-cobalt-lithium products gradually recovered from the pandemic. So robust was the purchasing demand that the recycling volume in June increased 62% compared with that in May.

As for the second half of the year, SMM estimates that domestic waste lithium batteries for recycling will reach 172,782 mt, an increase of 31% from the first half year. As for the reason for the increase, SMM expects that in the second half of the year, the supply of scraps will increase due to the expansion of cathode material and battery companies. At the same time,  battery recycling enterprises are expected to release more new capacity, which lead to growing demand for scraps. Therefore, the recycling volume is predicted to grow higher than that of the first half year. Scrap, as an important source of lithium battery raw materials, will continue to attract market attention, and the value of lithium will stand out. As the improved lithium recovery rate will bring higher returns, the recycling market is likely to become more competitive. In other words, the integration of dismantling and smelting in the recycling industry chain will become the mainstream.