Chinese used lithium batteries supply is tight and recycling prices rise

The data shows that in August 2022, a total of 30,396 tons of waste lithium batteries were recycled in China (including recycling waste in the form of batteries, pole pieces and black powder), and the recycling volume increased slightly by 2% compared with July. As well as the upward impact of lithium carbonate prices, the discount coefficient of scrap recycling has also shown an upward trend.

The supply of used lithium batteries continues to be tight

Relevant sources said that in September, the tense situation in China’s used lithium battery market did not ease. The main reason is that the current volume of used lithium batteries has not fully erupted, the supply of waste materials is less than the capacity demand of battery recycling companies, and there are also upstream traders stockpiling goods in the market.

Under the condition of imbalance between supply and demand, the price of scrap recycling is also boosted by the price of lithium carbonate in China, and continues to rise. The relevant person in charge of the battery recycling department of a large battery company in China said that, as far as they know, the current market competition for used lithium batteries has reached a fevered level.

It is understood that currently China’s renewable lithium battery waste mainly consists of two parts, namely decommissioned power batteries and battery cell factory waste. In the field of power battery recycling, here are top 10 car battery recycling companies. Generally speaking, the service life of ternary lithium battery is 4-6 years; the echelon life of lithium iron phosphate battery is 4-6 years, and the retirement life is 6-8 years. The battery cell factory will have some substandard BC products in the production process, usually the proportion of substandard products is about 5%.

Recycling prices of used lithium batteries rise

How far has the recycling price of used lithium batteries increased? According to reports, taking the waste positive pole piece of the ternary lithium battery as an example, the ternary pole piece is one of the most sought-after products in the lithium battery recycling market. The nickel content is about 30%, the cobalt content is 6%-9%, and the lithium content is 6%-6.5%. The current discount factor of the ternary pole piece powder reaches 230%.

According to reports, in the current Chinese waste lithium battery recycling market, the discount coefficient is determined by black powder enterprises, traders and hydrometallurgical enterprises based on their respective costs, profits, current product sales and product price expectations. For example, the hydro-smelter will determine the discount factor based on the current value of nickel sulfate, cobalt sulfate, and lithium carbonate and the comprehensive profit that it can bring.

According to calculations, the price of waste battery black powder & pole piece black powder & pole piece price = (SMM electrolytic nickel price * nickel content in waste % + SMM electrolytic cobalt price * cobalt content in waste %) * nickel-cobalt discount coefficient %. According to this price formation formula, based on the recent nickel price and cobalt price, the price of the ternary pole piece powder of the above specifications can reach about 200,000 RMB/ton. However, the price of metals varies greatly. When recycling companies negotiate with upstream companies, they will determine the final scrap recycling price based on the metal price of the day.

As for the reason why the current pricing formula does not contain lithium price, because a year ago, the price of lithium carbonate was only about 50,000 RMB/ton, and there was no profit in lithium extraction, so lithium was not priced separately. At present, the waste lithium battery recycling market is considering the replacement of new pricing methods, taking the price of lithium into account.

The new pricing method is waste battery black powder & pole piece black powder & pole piece price = SMM electrolytic nickel price * nickel content in scrap % + SMM electrolytic cobalt price * cobalt content in scrap % + metal lithium price * lithium content in scrap %.

On September 21, according to data, the average price of battery-grade lithium carbonate in China was 500,000 RMB/ton, close to the annual high of 504,000 tons, and the average price of lithium hydroxide battery-grade micropowder was 497,500 RMB/ton. Recently, the market transaction price of lithium carbonate products has exceeded 510,000 RMB/ton.

Lithium battery recycling overcapacity

From the perspective of the specific types of battery materials recycled, the data shows that in August, a total of 19,229 tons of ternary waste was recycled, accounting for 63%, an increase of 25% compared with the previous month; 10,156 tons of lithium iron phosphate waste were recycled, accounting for 34%, a decrease of 16% from July; 1,011 tons of lithium cobalt oxide were recycled, accounting for 3%, a decrease of 56% from the previous month.

According to analysis, the demand for ternary power batteries recovered in August, and the demand for nickel sulfate and cobalt sulfate increased. As the most direct raw material for obtaining nickel and cobalt salts in the recycling industry, the recycling volume of ternary waste has increased compared with the previous month.

In addition, although the recycling cost of ternary waste is relatively high, it is also the raw material with the highest comprehensive recycling efficiency. In order to ensure the stable output of nickel-cobalt-lithium products and the stable production rate of the head recycling enterprises, the demand for ternary wastes will only increase.

In August, the price of iron, lithium and lithium followed the price of lithium carbonate, and the cost of iron and lithium recycling enterprises increased. Although the price of lithium carbonate products has risen, the product price cannot cover the cost well, and the gross profit is extremely low, which indirectly leads to a decrease in the recovery of iron and lithium this month.

It is expected that in September, the recycling volume of China’s waste lithium battery recycling market increased slightly compared with August, and the cost of waste materials increased. However, in order to ensure smooth production capacity, the recycling volume of leading recycling companies will remain stable or increase slightly on the basis of August.

Taken together, it is estimated that the total amount of waste lithium battery recycling will reach 31,901 tons in September, an increase of 4% from the previous month. As far as the whole year is concerned, the situation of short supply in the market may continue until the end of the year. According to statistical analysis, in 2022, China has built a lithium battery recycling and processing capacity of 960,000 tons, mainly in Hunan, Jiangxi, Guangdong, and Zhejiang.

Taking into account the access policies and fiscal and taxation policies of local governments for lithium battery regeneration in the later period, the recycling and processing capacity of Jiangxi and Anhui provinces will be further improved. The supply of recycled lithium battery waste is expected to be about 410,000 tons throughout the year. Among them, the retired power battery is about 332,600 tons, and the total amount of factory waste is about 80,000 tons.

The industry is overcapacity, and the average operating rate of the industry is 43%. Scrap supply is still the main theme of the recycling market. In addition, in the rising market of lithium carbonate in the past year, many companies have seen the economic benefits of extracting lithium from iron-lithium waste, and have invested in the construction of iron-lithium waste production lines in the first half of the year, and it will be put into production in the second half of this year, which will further exacerbate the shortage of iron and lithium waste.