September data show China’s lithium battery recycling procurement at 28,100 mt, up ~8% month on month, with recycled lithium chemicals, nickel salts, and cobalt salts all increasing. Provinces across China are fast-tracking multi-thousand-metric-ton recycling and second-life battery projects focused on LFP-to-ESS repurposing. At the same time, cobalt sulphate prices have surged and then plateaued, cobalt intermediate products remain tight, and refined cobalt pricing is volatile. In the US, black mass still largely leaves the country for processing. The result: recycled feedstock is now central to cathode supply economics.
China’s recycling market for lithium batteries is scaling into true industrial volumes. Reported market procurement volume in September reached 28,100 metric tons, up roughly 8.18% month on month. The upstream driver is straightforward: downstream demand is being released in a sustained way, and recyclers — especially hydrometallurgical plants — are running hard.
LFP loop: Most lithium iron phosphate (LFP) battery hydrometallurgy recycling plants maintained high output against a backdrop of stabilizing lithium carbonate prices. This drove recycled lithium chemicals from scrap to around 8,000 mt in September, up about 9.7% month on month.
Ternary loop: Hydrometallurgy plants that handle nickel- and cobalt-bearing ternary scrap saw stronger procurement enthusiasm. Cobalt sulphate prices rose sharply on the supply side even as lithium carbonate stayed relatively stable, improving the economics of processing spent ternary batteries. That pushed nickel salt production from recycling to about 5,500 mt in metal content (up ~3.32% MoM) and cobalt salt production from recycling to around 1,380 mt in metal content (up ~1.1% MoM).
In other words, scrap is now a real feedstock stream for lithium, nickel, and cobalt chemicals — not a rounding error. The pace matters for pricing: quotations from grinding mills and traders rose alongside nickel, cobalt, and lithium chemical prices, and black mass (the mixed active material recovered from spent cells) followed higher. Market transaction sentiment was notably hotter than the prior month.
Looking ahead, market views diverge. Some players expect hydrometallurgical procurement to continue climbing toward 30,000 mt in October, implying roughly 6.76% growth month on month. Others see procurement stabilizing near 28,000 mt, essentially flat. Either way, the base level is now structurally high. Recycling is not waiting for an EV end-of-life “tsunami”; it is already supply-relevant.
The fastest-growing segment of this recycling buildout is not only black mass production. It’s also regulated, localized second-life deployment — especially repurposing used EV batteries (often LFP) into stationary energy storage systems. Over just a few weeks, multiple Chinese provinces disclosed environmental impact assessment (EIA) notices, pre-approvals, or acceptance reports for large-scale recycling and second-life capacity. These public postings are effectively local governments signaling: “We will host this industry.”
Shandong: A 30,000 mt/year “New Energy Power Scrap Lithium Battery Second-Life Application and Harmless Treatment Project,” total investment ~50 million yuan. It includes one second-life application line and two dedicated harmless treatment (dismantling/processing) lines.
Fujian (Fuding Industrial Park): A reported 1.0123 billion yuan “New Energy Battery Materials Recycling Project,” now publicly disclosed in full EIA text.
Hebei (Shunping County, Baoding City): A lithium power battery second-life application project with a total investment ~150 million yuan. Planned output: second-life utilization of 25,000 sets of power batteries annually, yielding ~0.95 GWh of ESS products, plus crushing/sorting for 10,000 mt of lithium-ion batteries per year.
Anhui (Chizhou): A 20,000 mt scrap lithium battery and positive pole piece resource utilization R&D and industrialisation project, total investment ~300 million yuan.
Jiangxi (Yichun City, Shanggao County): A 5,000 mt/year scrap LFP battery second-life application line with 50 million yuan in planned spend.
Shaanxi (Baoji City, Qishan County): A 40,000 mt/year power battery recycling, dismantling, and second-life application project with about 110 million yuan total investment, designed for two full recycling lines (crushing/drying/screening/grinding), one dismantling line, and one second-life line. Nameplate capacity: recycle/dismantle 20,000 mt per year and second-life another 20,000 mt per year.
Zhejiang (Qingyuan Industrial Park): An “Annual Dismantling of 20,000 Retired Vehicles and 15,000 mt Power Battery Dismantling Processing Center Project,” ~1.005 billion yuan total investment. The site is engineered to process 15,000 mt of NEV power batteries per year, dismantle 20,000 end-of-life vehicles, and handle 70,000 mt of scrap steel.
Fujian (Quanzhou City): A scrap lithium battery second-life application and recycling project focused on dismantling, repurposing, and crushing of lithium batteries.
Anhui (Bengbu Economic Development Zone): A comprehensive utilization project targeting 10,000 mt/year across three phases. Phase 1 prioritizes second-life use of power batteries at a 7,000 mt/year scale; Phase 2 transitions to dismantling and materials recovery at 3,000 mt/year.
Formal EIA disclosure to socialize environmental risk and give legitimacy.
Regionally distributed processing hubs to shorten scrap logistics and cut transport cost.
Integrated flows where batteries are (1) triaged for second-life ESS use if their state-of-health is acceptable, and (2) shredded/processed hydrometallurgically if not.
The emphasis on second-life ESS is crucial. Instead of sending every retired EV pack straight to black mass, viable LFP modules are being rerouted into stationary storage products in the tens-of-thousands-of-sets-per-year range. That extends the economic life of lithium, iron, and phosphate units before they re-enter the chemical supply chain.
Cobalt chemistry is at the center of this recycling boom. Spot cobalt sulphate prices recently surged and then flattened. Smelter quotations for cobalt sulphate produced from intermediate products held around 91,000–93,000 yuan/mt this week, while cobalt sulphate made from mixed hydroxide precipitate (MHP) and recycled material was offered near 86,000–88,000 yuan/mt. Downstream, ternary precursor and Co₃O₄ producers turned cautious after that rapid run-up, delaying aggressive restocking because their own orders weren’t fully locked. Cathode producers had largely completed annual stocking, softening immediate buying appetite. The result is a price standoff: upstream wants to defend higher quotes, downstream is digesting and pushing back. Market participants expect a near-term stalemate in which cobalt sulphate prices stabilize rather than keep surging in the immediate term.
Meanwhile, cobalt intermediate products (such as imported cobalt hydroxide/MHP) maintained an upward price trajectory. Customs data showed September imports ticked up on a month-on-month basis, but the increase remains small relative to demand. Major miners and traders are reportedly so confident in tight forward supply that many simply withheld offers. Downstream smelters are inquiring at higher numbers, but actual concluded trades are scarce — a “price without market” structure driven by the perception that structurally tight domestic cobalt raw material supply will persist. In short: physical units are scarce enough that sellers can sit on them.
Refined cobalt prices, by contrast, were extremely volatile. Smelters paused quotations due to tight feedstock. Traders initially chased futures-driven upside and quoted at premiums, but downstream balked at the speed of the increase and liquidity dried up. To move tonnage, some traders had to walk quotes down toward parity or even slight discounts versus benchmarks. By late week, refined cobalt prices softened. Analysts point to three immediate drivers:
Once refined cobalt spiked, converting refined cobalt back into cobalt salts became less profitable, so smelters’ willingness to buy that metal as feedstock fell.
Overseas refined cobalt prices stayed elevated, but the arbitrage to absorb excessively high domestic Chinese prices was limited.
Some lower-priced, non-invoiced cargo began circulating and pulled the average offer level down.
Critically, the price spread between refined cobalt and cobalt salts widened, and because refined cobalt can literally be dissolved back into cobalt sulphate, that spread cannot stay irrational for long. The expectation is that refined cobalt will drift back toward the effective conversion-cost line of cobalt salts. From a structural standpoint, that means the marginal cobalt unit in China is increasingly being set by recycled feedstock economics — not by mined feed alone.
In parallel, the Western Hemisphere is trying to build a closed-loop battery metals system, but the gap between ambition and infrastructure is still wide. S&P Global Commodity Insights forecasts US lithium consumption to grow by an average of 40% per year between 2024 and 2029, while Canada’s lithium consumption is projected to rise even faster — roughly 74% per year on average in that same period, albeit from a smaller base. That demand is driven by EV cells, grid storage, and adjacent electrification sectors.
But primary supply is short. The US has only one commercially producing lithium mine today — Albemarle’s brine operation at Silver Peak, Nevada — with output near 5,000 mt of lithium carbonate equivalent (LCE) annually, versus US lithium consumption of roughly 20,000 mt LCE in 2024. The region’s lithium refining footprint is also thin, with just two lithium hydroxide refineries in North Carolina at about 15,000 mt and 5,000 mt capacity. Canada has two producing hard rock lithium mines (Manitoba and Quebec) and one refinery under construction, but combined US/Canada production in 2024 was only around 40,000 mt LCE compared with roughly 1.28 million mt LCE globally.
Recycling is supposed to close that gap — but today, it mostly doesn’t. In the US, black mass production (from end-of-life cells and manufacturing scrap) is growing, yet much of that material is still shipped offshore for refining. Historically, a large share went to South Korea, where hydrometallurgical refiners could flex existing cobalt- and nickel-recovery capacity. As of August 1, 2025, China has reopened its import channel for certain grades of black mass, classifying qualifying, higher-quality material as “non-waste,” which makes it eligible for import again. That instantly created new pull for US black mass, but the quality thresholds are strict, and not all US output yet meets them.
Commercial terms in the US reflect this bottleneck. Reported payables for black mass have hovered in the ~69%–72% range for nickel and cobalt, with buyers actively preferring higher-grade material containing at least 20% nickel. Without sufficient domestic hydrometallurgical refining capacity, US recyclers are still effectively price-takers; their black mass is valued by offshore processors’ economics, not by a fully domestic circular economy. To fix that, the US Department of Energy is funding recycling R&D and scale-up demonstrations, aiming to build local refining and reintroduce recovered nickel, cobalt, and lithium into North American cathode and precursor lines. But that is still in buildout, not yet in steady-state production.
In China, the state-backed permitting wave for recycling and second-life use shows that authorities view end-of-life batteries as strategic feedstock — and they are building the industrial base to capture it domestically, province by province. Approved projects are no longer pilot-scale; they are in the tens of thousands of metric tons per year and explicitly integrate (1) second-life ESS product assembly and (2) hydrometallurgical recovery of lithium, nickel, and cobalt salts. That means black mass is not merely exported; it is processed into battery-grade intermediates that flow straight back into cathode materials and lithium chemicals.
In the US and Canada, by contrast, the basic math still depends on imported lithium chemicals — often sourced from South American brine and refined in Asia — and exported black mass. North American policy is moving in the right direction, but for now China is closer to a closed-loop model in which scrap increasingly sets the marginal cost curve for cobalt sulphate, nickel sulphate, and recycled lithium carbonate. That is already influencing primary miners, traders, and refiners.
Sentiment: bullish for black mass and cobalt intermediates; neutral for cobalt sulphate spot; neutral-to-bearish for overpriced refined cobalt.
In the 1–6 month window (November 2025–April 2026):
China’s recycling procurement volumes are likely to stay elevated around 28,000–30,000 mt per month. Hydrometallurgical plants remain incentivized by relatively firm cobalt sulphate and nickel sulphate pricing, and by stable lithium carbonate.
Provincial-level approvals for second-life ESS and dismantling lines will continue. The focus on LFP battery repurposing into stationary ESS (0.95 GWh-type projects in Hebei, multi-line integrated hubs in Shaanxi, etc.) suggests second-life will become a mainstream extension of LFP pack value, not a niche.
Cobalt sulphate prices probably consolidate. Downstream cathode and precursor producers have slowed spot buying after the run-up, creating a temporary stalemate that should cap further near-term upside.
Cobalt intermediate products (MHP, hydroxide) remain structurally tight. Sellers are withholding offers, and imports haven’t ramped enough to loosen the market, so the bias for cobalt feed remains upward.
Refined cobalt prices likely drift toward parity with cobalt salts’ implied conversion cost. Traders who chased early-week highs without downstream acceptance face margin pressure.
Bullish: Black mass availability and pricing power, cobalt intermediate feed, second-life ESS integration of LFP.
Neutral: Cobalt sulphate spot quotes after an aggressive rally.
Bearish: Inventory holders of high-priced refined cobalt betting on further immediate upside without fundamental tightness to back it.