Black mass market waits to see the effect of higher nickel and lithium prices

Warmer sentiment for lithium and nickel prices in Asian markets was not able to attract more buying interest for black mass from South Korean buyers in the week ended Wednesday March 13, due to continued thin margins at recyclers, according to market sources

Spot lithium hydroxide and carbonate prices in the CIF China, Japan and South Korea (CJK) market picked up for the first time in months on Monday of this week, following the recent lithium price rally in China’s domestic market.

Nickel prices on the Shanghai Futures Exchange (SHFE) also moved upward on Wednesday while the other base metals on the exchange showed limited changes. LME nickel prices have continued to move up over the past few weeks.

But most market participants believed that the recent uptick in metal prices was not enough to increase demand for black mass significantly, with some doubting the sustainability of the current price uptrend.

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Downstream demand for lithium remained weak overall. We are operating at 50% capacity currently. We may need to postpone our plan of raising the operating rate from April to May due to uncertainties in the metals market,” a recycler source in South Korea told Fastmarkets on Wednesday.

“We are operating at 70% capacity at our facility, and I believe that across Korea that would be regarded as high. Almost no recycler can operate at full capacity at the moment in Korea due to the low margins,” a second Korean recycler source said.

“Our US supplier tried to raise its offer to 72-74% CIF for nickel and cobalt including value of lithium,” a Southeast Asian buyer source said. “But we don’t think the nickel price increase will be continuous, so the best payables we can do are 68-70% CIF.”

A European trader source said on Thursday that, although nickel prices had risen, he was not yet seeing much change in black mass payables.

Furthermore, with a black mass oversupply situation taking hold in the market recently, Asian buyers were more picky about the qualities they purchased.

South Korean buyers told Fastmarkets this week that they were hoping for 1.5-2.0% aluminium content and 1-2% copper content in NCM black mass, as well as maximum 2% fluorine. The Southeast Asian buyer sought content of less than 3% of both aluminium and copper.

Trading activity low

A deal for nickel cobalt manganese (NCM) black mass was heard this week to South Korea from India at 65% CIF for nickel and cobalt, including the value of lithium.

A deal for higher-nickel NCM black mass was heard at payables of 70-72% CIF South Korea for nickel and cobalt, including the value of lithium, after the assessment period had closed, a seller source said on Thursday.

Recent offers of NCM black mass were heard from the US in a range of 70-75% CIF Korea for nickel and cobalt, value of lithium included.

Buying targets from South Korean recyclers were heard at 65-68% CIF for nickel and cobalt in NCM black mass this week, including the value of lithium.

Key market participants believed that most overseas suppliers were asking for payables of at least 70% CIF South Korea for nickel and cobalt, value of lithium included.

“It is reasonable for the sellers to target higher payables when both nickel and lithium prices rise. But it is difficult for we recyclers to follow. We believe that market fundamentals remained unchanged,” the second South Korean recycler told Fastmarkets.

South Korean black mass prices

Fastmarkets’ South Korean black mass payable assessments calculate lithium separately from its nickel and cobalt payables, in line with demand from market participants.

Fastmarkets’ assessments of the black mass, NCM/NCA, payable indicator, nickel, cif South Korea, % payable LME nickel cash official price, and the black mass, NCM/NCA, payable indicator, cobalt, cif South Korea, % payable Fastmarkets’ standard-grade cobalt price (low-end), were both 63-68% on Wednesday, unchanged week on week.

The weekly assessment of the black mass, NCM/NCA, payable indicator, lithium, cif South Korea, % payable Fastmarkets’ lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices, cif China, Japan & Korea, was 3-5% on Wednesday, also unchanged week on week.

For high-cobalt lithium cobalt oxide (LCO) black mass, South Korean recyclers were heard bidding at payables of 55-65% CIF for cobalt on Wednesday, including the value of lithium, but buying interest was quite limited.

Deals were heard at 62-63% CIF Korea for LCO black mass of unspecified origin, Fastmarkets heard on Thursday. Demand for LCO black mass was lower due to lower cobalt prices and higher cobalt supply in the global market recently, according to a European black mass consumer source.

Fastmarkets’ assessment of the black mass, LCO, payable indicator, cobalt, cif South Korea, % payable Fastmarkets’ standard-grade cobalt price (low-end), was 60-63% on March 13, unchanged from a week earlier.

And the weekly assessment of the black mass, LCO, payable indicator, lithium, cif South Korea, % payable Fastmarkets’ lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices, cif China, Japan & Korea, was 3-5% on Wednesday, similarly unchanged week on week.

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