In a decisive move to solidify its position as the world’s battery recycling hub, China’s State Council has announced a reduction in import tariffs for recycled black mass and key commodities starting January 1, 2026. This policy shift has already triggered a sharp response in the spot markets, with lithium carbonate, cobalt sulfate, and nickel sulfate prices surging this week. Our latest analysis explores the implications of this regulatory pivot, the introduction of new pricing benchmarks for black mass payables, and the structural divergence emerging in the second-life battery market.
The Customs Tariff Commission of China’s State Council has officially released its "2026 Tariff Adjustment Plan," signaling a major strategic shift intended to lower the barrier for critical raw material imports. By reducing provisional import tariffs on resource-based commodities—specifically recycled black mass for lithium-ion batteries—Beijing is effectively incentivizing the flow of global battery scrap into Chinese processing facilities. This move is designed to enhance the synergistic effect between domestic and international markets, ensuring that China’s massive refining capacity remains fed as the global EV fleet enters a large-scale retirement phase.
The immediate market response to the tariff news and tightening supply dynamics has been bullish. In the final week of December 2025, spot and futures prices for battery-grade lithium carbonate continued to climb, driven by a combination of macro-policy optimism and rigid monthly procurement cycles.
This uptrend has cascaded down the value chain. Upstream powder processing companies, observing the supply-demand tightening, have adjusted their pricing models. For instance, Lithium Iron Phosphate (LFP) cathode black powder prices have risen week-on-week, currently ranging between 4,300 and 4,650 yuan per lithium point. Similarly, the nickel-cobalt coefficients for ternary black powder have ticked upward, reflecting a transmission of costs from rising lithium salts to the recycling sector.
While raw material costs are rising, the downstream landscape is exhibiting a distinct structural divergence. Demand for battery cells in the Energy Storage System (ESS) sector remains robust, creating tight supply conditions. However, the electric vehicle (EV) sector is seeing stable but not accelerating demand, leading to a bifurcation in asset values.
Safety concerns have driven a preference for LFP B-grade cells in the second-life market, pushing their prices higher. Conversely, ternary battery cells are flowing primarily into the battery-swapping market where demand is constant but capped, limiting upside price potential for ternary B-grade assets. This "safety premium" for LFP is becoming a defining characteristic of the 2025/2026 transition.
Sentiment: Bullish (Short-Term) The combination of lower import barriers and pre-holiday stockpiling creates a strong floor for battery metal prices entering Q1 2026. We expect lithium carbonate and nickel prices to remain firm as traders price in the liquidity injection from the tariff cuts. The recycling sector will likely see a "scramble for feedstock" dynamic, driving up payables for high-quality black mass globally. Stakeholders should monitor the spread between LFP and ternary recycling values, as the safety premium for LFP appears structural rather than transient.