Lithium Battery Scrap Recycling Volume at 28,100 mt in September with the Promotion of Separate Pricing Model of Lithium Content

SHANGHAI, Oct 14 (SMM) - According to SMM research, in September 2022, a total of 28,104 mt of lithium battery scraps were recycled in China (including scrap in the form of battery, pole piece and black mass), and the recycling volume declined 7% from the previous month.

The soaring prices of lithium carbonate in September was an important support for the rise in scrap prices. At present, the scraps are still in short supply, and phenomena like good-hoarding and price-raising became common. As the profit at each link of scrap recycling is compressed, the hydrometallurgy smelters could only maintain basic production by purchasing raw materials. Although the separate pricing model of lithium content has been promoted in the scrap recycling market, the upstream black mass companies refused to compromise on profits as they had to purchase pole plates at high costs. The implementation of separate pricing model of lithium content can avoid the risk of doping, but the problem of high prices for scraps has not been solved. As a result, the cost of purchasing battery scrap continued to rise for hydrometallurgy smelters.

According to SMM database, in September 2022, the recycling volume of ternary cathode battery scrap, LFP battery scrap and LCO battery scrap stood at 18,823 mt, 8,364 mt and 917 mt respectively. The proportion of these three battery scrap types were 67%, 30% and 3% respectively.

The recycling volume of ternary cathode battery scrap dropped 2% MoM mainly because the scrap prices rose further in September, which led to higher costs and extremely low gross profit for recyclers. At the same time, high-priced battery scrap and high-priced lithium carbonate both present great risks. Under these circumstances, some small recycling plants, based on their own actual conditions, cut the purchase and production or considered other substitutes, so their recycling volume of ternary cathode battery scrap declined to different extents. Nevertheless, the total recycling volume only slipped slightly compared with the previous month. This was because some enterprises, who usually purchased a large amount of recycled scraps and those who were expanding the production, still depended on a high recycling volume to maintain normal production and ramp up production capacity. Therefore, they continued to purchase battery scrap from traders. On the whole, the recycling volume of ternary cathode battery scrap only decreased slightly from the previous month.

The recycling volume of LFP battery scrap dipped 18% compared with August. In September, the prices of LFP battery scrap continued to increase following the rising lithium carbonate prices. At present, the prices have risen to a extremely high level, which has led to an increase in the cost of LFP battery scrap recyclers. As the final product from LFP battery scrap recycling, lithium carbonate will bring considerable risks if its prices hover at highs.

In September, the recycling volume of LCO battery scrap slipped by 9% month-on-month. Since LCO battery scrap contains lithium, its prices were also on the rise in September. But the higher content of cobalt than lithium made LCO battery scrap less cost effective. Therefore, enterprises who had regarded LCO battery scrap as raw materials also sought for other substitutes. Currently, the LCO battery scrap is more often used as an "additive" to increase the cobalt content during the hydrometallurgical process to improve the cobalt recovery rate.

According to SMM survey, a total of 3,674 mt of nickel, 2,533 mt of cobalt and 1,216 mt of lithium were recovered in September 2022 (all in metal content). The volume of cobalt metal recovered includes the cobalt sulphate and cobalt oxide. The nickel content recovered fell 7% month-on-month, cobalt dropped 7%, and lithium declined 8%.

According to SMM database, in September 2022, the volume of nickel sulphate recovered stood at 3,674 mt in metal content, cobalt sulphate 2,461 mt in metal content, cobalt oxide 72 mt in metal content, industrial-grade lithium carbonate 1,565 mt, battery-grade lithium carbonate 2,706 mt, and crude lithium carbonate 2,483 mt. Due to the rapid changes in the industry dynamics, some recycling companies upgraded their production lines in September. In order to ensure the accuracy and reliance of the SMM data, samples of recyclers engaged in industrial-grade, battery-grade and crude lithium carbonate production have been adjusted based on their actual products.

SMM expects that the recycling volume of lithium battery scrap in October will increase slightly compared with that in September. The top-tier recyclers will maintain normal operation in order to ensure stable output, and their recycling volume will remain stable or increase slightly on the month. At the same time, some small recyclers may stock up raw materials as their inventories will drop with fewer recycling volume in September. Taken together, SMM estimates that the total recycling volume of battery scrap will amount to 29,680 mt in October, up 6% MoM, including 19,349 mt of ternary cathode battery scrap, 9,035 mt of LFP battery scrap, and 1,296 mt of LCO battery scrap.