Back to News
China by far has the largest recycling market in the world aligning with the rapid expansion of its battery production industry. Yet, despite its scale and influence, the sector faces a series of structural challenges. These obstacles are not unique to China but resonate across the global recycling industry. Here, we explore the key hurdles confronting Chinese recyclers and their broader implications.
1. Feedstock shortages and quality issues
China’s recycling market is grappling with overcapacity, leading to a scarcity of feedstock and therefore competition among recyclers for feedstock acquisition. This market imbalance forces many recyclers to accept any available materials. However, competition varies over battery type and black mass quality.
For example, lithium cobalt oxide (LCO) batteries, commonly found in consumer electronics such as smartphones and laptops, have lost their appeal due to depressed cobalt prices in China’s domestic market. Moreover, feedstock quality remains a concern. The hydrometallurgical recycling processes requires high-quality black mass, with high mineral concentrations. However, low-quality black mass, often contaminated with aluminium, copper, and moisture, raises costs and reduces efficiency. Recyclers prefer black mass derived from production scrap due to its superior purity and reliability, but such sources are not always readily available.
Read: Challenges facing the battery recycling industry
2. Stricter black mass standards
A new national standard for black mass composition is creating divisions within the industry. Smaller recyclers argue that the requirements are overly stringent, as it excludes most overseas producers from meeting the benchmarks. They advocate for a relaxation of the standards to facilitate imports of black mass from broader sources and therefore give the potential to expand their operational scope. Conversely, larger recyclers support even stricter standards to cement their market dominance. This regulatory discord underscores the competitive tensions within the sector and the struggle for equitable access to resources.
3. The LFP conundrum
According to Rho Motion’s battery assessment over 70% of EVs in China sold use LFP batteries, this poses a unique challenge. While technically recyclable, the market dynamics render LFP recycling commercially unviable. Depressed prices for lithium carbonate, iron phosphate, and graphite, the primary materials recovered from LFP batteries, have forced many smaller recyclers to suspend their operations to avoid losses. The graphite market is particularly weak, with prices so low that demand for recycled material remains negligible as players tend to opt for virgin materials.
Read: LFP battery recycling, the challenges and opportunities
4. Overseas expansion
Faced with domestic challenges, many Chinese recyclers are eyeing international markets, including North America and Europe, for growth opportunities. However, expansion abroad is fraught with complexities. Geopolitical tensions, supply chain disruptions, and high capital expenditure make international ventures risky. Securing feedstock in foreign markets especially without guaranteed returns on investment, leaves many players unsure of when to expand facilities.
The broader outlook
Beyond China, battery recyclers worldwide are contending with similar issues as the sector evolves. Technological advancements, fluctuating material prices, and regulatory pressures shape a rapidly changing landscape. However, as the industry matures, clearer market directions are expected to emerge, potentially offering a roadmap for long-term sustainability.
More information
For more information about the battery landscape, see our research or get in touch.
For full access to our news and insights, log in to our Membership Platform
If you’re not yet a member and would like a trial, fill in the form below.