MethodologyContact usSupportLogin
Key takeaways:
The relaxation of China’s rules for the import of black mass is fast approaching, and the global battery recycling market has been abuzz in July with discussion about what this significant development could mean for prices, trade flows and supply chains. Black mass is the name given to a powdery cocktail of metals made by the shredding of lithium-ion batteries, and containing critical metals such as nickel and cobalt. It is a key material at the heart of the global drive for battery recycling.
Businesses in China will be permitted to import black mass under strict material content specifications beginning from August 1 this year, according to a government statement published in mid-June. It has long been illegal in the East Asian country to do so.
Taken at face value, the prospect of China freely importing black mass is a potentially earth-shaking development for this developing market.
China is by far the largest consumer of black mass – and the highest-paying – with badly underfed operations in the country running at capacity utilization rates lower than 50%, according to industry sources.
But the volumes that the Chinese market would be able take in through the new legalized import route will depend heavily on the availability of properly specified material in the market, trade sources said.
Material imported for ‘Category 1’ nickel-cobalt-manganese (NCM) or lithium-cobalt-oxide (LCO) chemistries must have a minimum nickel-cobalt total of 25%, a lithium content of 3.5%, and 0.4% water-soluble fluoride content.
Iron content will not be inspected in category 1 NCM/LCO materials, industry sources said, while category 2 lithium iron phosphate (LFP) materials must have a minimum of 18% iron.
So, what might happen next?
In this focus article, Fastmarkets looks the most common arguments being discussed by both Western suppliers and Asian black mass consumers.
China’s new national black mass standard, introduced on July 1, denotes two different purity categories of the powdery battery recycling material, labeled ‘grade 1’ and ‘grade 2’.
While grade 1 is a high-grade cathode-powder specification material, grade 2 more closely fits the chemistry of a high-quality black mass.
Grade 1 material, often referred to as ‘black powder’ in the market, is generated from production and cell scrap, making it a very clean material with very high metal contents, together with low impurities.
“Black powder can be easily imported into China because there is not much fluoride contained in this type of material,” a Chinese buying source said.
“But at the same time,” he added, “the availability of black powder is much lower than black mass. Suppliers may need to mix black powder or extremely high-grade black mass with lower grades to meet the current standard.”
Another very popular view is that some of the content specifications in China’s rules could prevent the exporting of large volumes of grade 2 materials to the market.
In particular, the limit of 0.4% water-soluble fluoride has caused concern among Western producers. Most of these who have spoken with Fastmarkets have said that they will be unable to meet this limit.
The combined 25% nickel and cobalt content in NCM black mass is also seen as being prohibitive by many Western black mass makers.
Fastmarkets’ black mass pricing methodology specification sets a minimum combined content of 20% of the two metals, which is attainable by more producers.
“The stringent limit on water-soluble fluoride content is still what most market participants are worrying about,” the Chinese buying source said.
“There is a good possibility of exceeding the fluoride limit for black mass,” a South Korean trading source said, “if the material is not heat-treated. And most of the European producers don’t do that for their materials.”
A South Korean recycler source told Fastmarkets that they look typically to source material with fluorine content of less than 1.5%.
A second South Korean recycler source said that fluorine from electrolyte (LiPF6) and separator (PVDF) can be removed by heat treatment. The process cannot remove fluorine completely, but it is possible for the material to have less than 0.4% fluorine once treated.
“Nobody will be able to satisfy these standards [for grade 2 materials] – not even US producers,” a second Southeast Asian trading source said.
A third Korean recycler source said on July 21 that he believed that Chinese companies would buy actively on the import market in the short term, but that the market would probably be regulated more strongly in future.
A US producer source had doubts about how Chinese customs authorities will check import cargoes, given the challenge of identifying fluorine levels without laboratory testing.
The third Korean recycler pointed out that, although Chinese customs teams are highly experienced, it might take a while to discharge cargoes in practice, particularly if large volumes are imported.
Several market participants believe that, even if China is unable to directly import a lot of black mass from international markets, these materials may be imported to other Asian countries.
At that point, processing could be undertaken to clean the material enough to gain acceptance in the Chinese market.
Such a practice seen in markets such as aluminium, for which China also has very strict import regulations. Zorba mixed metal scrap is often sold into Malaysia and Thailand, where it is cleaned up and exported to China in the form of a higher-grade scrap, such as twitch.
With China opening its doors to legal black mass imports, it makes trading material into Southeast Asia much less risky than it has been in the past, market sources said.
“China is expected to use Southeast Asia, especially Indonesia, as a processing hub for low-grade [black mass] due to looser regulations and proximity,” Fastmarkets recycling analyst Andre Cortesao said. “This could drive regional hydrometallurgical investments to upgrade black mass quality for export to China, as shown by GEM’s major recycling investment in Indonesia.”
But some market participants expressed concerns about potential increases in the cost of processing when moving black mass legally from Southeast Asia to China.
“The buying spree for black mass slowed down in Southeast Asia following the import standards in China being finalized,” a third South Korean recycler source told Fastmarkets. “It seems that additional refining processes for black mass are required in Malaysia to fit the Chinese import rules, and we heard it would cost around $0.20-0.50 per kilogram.”
There is also uncertainty over the origins of material to be sold into China. The US has had a strained and highly volatile tariff relationship with China so far this year but, following negotiations in June, the retaliatory tariff rate applied by China on imports of most US goods dropped to 10%.
This could also be a reason why selling first into Southeast Asian countries could be advantageous for black mass traders.
On the other hand, Malaysia has been cracking down recently on the importing of e-scrap and black mass, together with moves to eliminate illegal waste processing facilities, so traders have been increasingly looking at selling into alternative markets such as Thailand.
A handful of European producers could also export to China, provided their facilities are certified as making a “product” rather than hazardous waste. But this loophole will close in the final quarter of 2026, when all EU black mass will become classified as hazardous waste materials, which can then be exported only to member-nations in the Organization for Economic Co-operation and Development (OECD), such as South Korea.
Most market participants believe there will be a further increase in the premium for payables of the high-grade black powder over black mass, due to the higher likelihood of China importing the material directly.
NCM black powder materials typically contain nickel content of more than 30% and lithium content above 6-7%, compared with typical values in standard black mass of 15-20% nickel and 3-4% lithium.
Recent deals for high-purity NCM black powder with lithium content typically exceeding 6-7% were heard at payables of 90-92% CIF Southeast Asia for nickel and cobalt, including the value of lithium, Fastmarkets heard on July 16.
That compared with Fastmarkets’ most recent assessments of the black mass, NCM/NCA, payable indicator, nickel, cif Southeast Asia, % payable LME Nickel cash official price, and of the black mass, NCM/NCA, payable indicator, cobalt, cif Southeast Asia, % payable Fastmarkets’ standard-grade cobalt price (low-end), both at 75-80% on July 16.
“We are already starting to see more buying activity for black powder,” a second Southeast Asian trading source told Fastmarkets earlier this month.
But market participants said that the outlook for payables on black mass was less clear.
Local Chinese prices for NCM black mass far outstrip the value paid in the CIF South Korea or Southeast Asia markets.
At current prices and payables, Chinese local consumers are paying around 34,200 yuan ($4,767) per tonne for NCM black mass containing 20% nickel, 5% cobalt and 4% lithium.
For material of the same specification, current CIF South Korea prices are $3,630 per tonne, meaning a premium in the China local price of $1,135 per tonne.
In payables terms, the CIF Korea market would need to pay payables of more than 100% CIF of nickel and cobalt including the value of lithium, in order to compete with the Chinese level for material of this specification.
“With [China having] 83% of global gigafactory capacity and 73% of global hydrometallurgical refining capacity, [its] re-entry into the black mass import market will significantly tighten global supply, and this is likely to drive up payables for compliant material,” Cortesao said.
This might create two types of black mass market, he added, comprising a premium market for high-quality black mass, mainly from production scrap, and a separate lower-quality market with reduced payables, probably centered in Southeast Asia.
“The split of the market might lead to tightness for high-grade black mass,” Cortesao said. “Producers with access to gigafactory scrap or advanced refining capabilities will be in a strong position.”
Southeast Asian traders ramped-up their buying of black mass earlier this year ahead of the rule change, leading to a buildup of stocks in warehouses in countries such as Thailand.
But certain sources believe that many of these stocked materials are too low in quality to gain direct access to the Chinese market, and this could be negative for payables.
“Some traders in Southeast Asia have been importing large volumes of black mass this year and storing it in warehouses ready for the China market opening,” the first Southeast Asian trader said. But he expected that the fluoride content in these materials would be too high for them to be accepted by Chinese customs and could face rejection.
In such a case, payables for standard black mass could fall in Southeast Asia when traders look to sell-off their bloated stocks, he added.
South Korean recyclers were also getting black mass offers from Southeast Asia in early July, according to market sources.
“It seems those materials were intended to go to China,” the third South Korean recycler source said, “but the suppliers found that they do not meet the limit for less than 0.4% fluoride, and they want to find new buyers.”
Whatever the consequences for prices and markets that arise from the new rules, Fastmarkets will be keeping a very close eye on developments.
Kirstyn Petras in New York contributed to this article.
Access trusted black mass prices and expert insights today!