• Oversupply of battery metals has pushed down prices
• Weak metals prices are causing black mass payables and inferred prices to fall
• Lower metal demand is leading to lower recycling utilization rates
• Refining under capacity will grow as an influx of end-of-life (EoL) black mass hits market
• Black mass payables expected to fall until 2026 before strong recovery
• Black mass inferred prices to increase over next 10 years
• Strategic partnerships are becoming increasingly important in the US and European recycling markets
• Certain advantages will separate out which companies will survive these market headwinds

1. Oversupply of battery metals has pushed down metal prices

High battery metal prices in 2022 incentivized additional metal supply to come online. However, this influx of additional supply of lithium, nickel and cobalt flooded the market causing prices to fall.

Despite this being a supply-side story, we have adjusted our battery demand forecast down 4-7% due to a weaker economic outlook and lower than expected electric vehicle (EV) sales. However, overall, we still expect the energy transition to lead to strong demand growth for batteries and the key battery metals which should mostly overshadow any macroeconomic issues.

2. Weak metal prices have caused black mass payables and inferred prices to fall

From September 19, 2023 to February 20, 2024, the Fastmarkets spot battery grade lithium carbonate equivalent (LCE) cif CJK fell 47%, the LME nickel cash official fell 17% and Fastmarkets cobalt in-whs Rotterdam fell 8%. NCM, NCA cif South Korea black mass nickel and cobalt payables trended downwards after peaking in July 2023 at 81.5%. In 2024, payables have been rangebound between 65.5-68.

Inferred black mass prices for NCM, NCA cif South Korea peaked at $6,590 per tonne in August 2023 before trending steadily downwards with a low of $2,088 per tonne on February 14, 2024.

3. Lower metal demand has led to lower recycling utilization rates and squeezed profit margins

Incentivised by the high metal prices of 2023, many new entrants joined the recycling market. Due to lower investment requirements and shorter timelines to get permits, we are seeing shredding facilities come online much faster than refining leading to overcapacity for shredding, particularly in Europe and the US. 

Fastmarkets is hearing caepx costs of £3 million for sorting, discharging and dismantling plants, £30 million for shredding facilities and £300 million for hydrometallurgical refining facilities. We also hear of timelines of 1-2 years to get a shredding operation online versus 5-10 years for hydromet to get online.

Overcapacity for shredding has led to strong competition for scrap batteries. Scrap battery prices weren’t hit as badly as black mass prices and European gate fees have fallen slightly. On the post-treatment side, an influx of primary metal supply and therefore lower demand for metals meant refiners had to compete with primary metal producers to supply the market.

Some refiners struggle to go beyond technical grade to battery grade and end up having to sell their technical grade battery metals and we’ve heard of technical grade running at a 20% discount to battery grade. Since black mass prices tend to trend a month behind metal prices meaning the refiners output was falling in value before their input costs were being reduced. All these issues have led to profit margins being squeezed with reports of some projects running at a loss and low utilization rates for shredders and refiners (as low as 20-30% for shredders).

The post Eight key trends for 2024 in the battery recycling market appeared first on Fastmarkets.

Interest and investment in battery recycling is picking up pace and there is increasing pressure looking to find a way to meet future battery material demand. Fastmarkets takes a deep dive into some of the key trends in this important emerging market.

1. LCO and NCM ‘most desirable’ types of black mass

Lithium cobalt (LCO) and nickel cobalt manganese (NCM) black mass is more valuable in terms of the contained battery metals than lithium iron phosphate (LFP) black mass. Per tonne of an averaged mixture of NCM cells there is approximately $8,700 of value from the lithium, nickel and cobalt (based on May 2023 prices), with lithium accounting for 14% of the weight but 55% of the value of these three battery metals.

LCO cells contain lithium and cobalt have $11,130 value with lithium accounting for 11% by weight and 42% by value out of these two metals. LFP batteries have approximately $3,170 value per tonne of cells, making them the cheapest battery to produce and the least valuable black mass.

2. LFP black mass can be refined with emerging technologies

Pyrometallurgical (pyro) refinement of black mass involves heating to 1,400°C at which temperature the lithium is lost to the slag, making this method unviable for LFP black mass. While NCM and LCO black mass can be refined with pyro it is a less popular recycling method due to the lost lithium.

Hydrometallurgical (hydro) refining costs roughly $1,500-1,800 per tonne of black mass, making it prohibitively expensive for LFP recycling. Hydro is the most popular recycling method, particularly in Asia where recovery rates for lithium are highest. Newer technologies such as electrochemical refining have lower operational expenditure and are viable recycling methods for a wider range of black masses including LFP. Since LFP is on the rise globally, and particularly in China, we expect more LFP black mass in the future.

In May 2023, Fastmarkets launched weekly payable indicators for NCM black mass for the cif South Korea market – which are the world’s first seaborne black mass prices. As of September 2023, Fastmarkets has a total of 11 black mass prices and are the only price reporting agency providing comprehensive coverage of the South Korea and Southeast Asia import markets, as well as the European markets.

3. Lithium-ion demand growing rapidly

Electrification of transport and the rapid development of energy storage systems (ESS) are driving demand for lithium-ion batteries. Fastmarkets forecast demand for lithium-ion batteries to grow 5-fold from 821 gigawatt hours in 2023 to 4,328 gigawatt hours in 2033 at a compound annual growth rate (CAGR) of 16%. This rapid growth has led to a steep increase in demand for battery metals such as lithium, nickel and cobalt.

Recycling (secondary metal) can supplement mining (primary metal) providing security of supply to regions that might not be naturally rich in these metals. Consumer electronics batteries have the shortest lifespan of about 2-5 years, whereas EVs is 10-15 years and ESS 15-20 years, meaning a longer wait for these batteries to be available for recycling.

4. Recycled ‘secondary’ metal production less than 5% of total production

While the recycling market has seen significant investments recently, it still only accounts for less than 5% of total battery metal production. Of the total material supplied to the market in 2023, 5% of the cobalt came from battery recycling, 6% of lithium carbonate equivalent (LCE) and 1% of nickel.

Fastmarkets forecasts secondary supply to increase to 12%, 7% and 5% respectively by 2033. This shows that while recycling will play an important role in supply and a move to more sustainable EV production, we still need more primary metal production for the foreseeable future.

5. Production scrap accounts for three quarters of all scrap battery supply

Production scrap currently accounts for 73% and end-of-life (EoL) 27% of all battery scrap. However, by 2031, EoL will take over as the main source of scrap when some of the EVs being made now are ready to be recycled. By 2033, Fastmarkets forecasts EoL to account for 59% and production scrap for 41%.

In a well-established gigafactory, roughly 5% of cells, packs and batteries will not pass checks, whereas in a new gigafactory this could be as high as 30%. These batteries will be immediately available for recycling as production scrap. The lifespan of a mobile phone or laptop is a few years, while an EV could be 10-15 years. When these batteries reach the end of their lives, most of them will be collected and recycled as EoL.

6. Second life to be adopted regionally

Second life or ‘cascade utilization’ is when used EV batteries are reused in energy storage for two- or three-wheelers. There can be safety issues with second life since there is an inflection or ‘knee point’ at 80% State of Health (SoH) below which there can be non-linear degradation. This means that even if a group of batteries looks very similar, one of them could rapidly deteriorate and even be a fire risk.

Due to this, there has been talk of banning second life in China and New York state, however, there are a few places that are more optimistic about second life, including India. India has a well-established market for taking used cars from Europe and is building out a value chain for used EV batteries, with companies such as Lohum. However, the second life market will be competing with recyclers for EoL and production scrap batteries.

Get all the latest insights on the battery recycling market

The Fastmarkets Battery Recycling Outlook includes 10-year battery supply and black mass price forecasts to give material manufacturers, battery makers, automakers and battery recyclers the insights and forecasts to understand and leverage the increasing recycled supply. Keep up to date with cobalt price insights and lithium insights on our dedicated market pages.

What’s inside this 100-page report?

• Forecasts and outlooks for black mass and battery raw materials
• Assessment of technology and the major recyclers
• Intelligence on battery recycling capacity build-outs
• Predicted scrap vs manufactured volumes
• Insights on the usability of expected volumes
• Key ESG and supply chain qualification criteria
• Economics of battery chemistries and technologies
• Access to expert analysts

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The post Six key trends in the battery recycling market appeared first on Fastmarkets.