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The increasingly urgent sale of cheaper recycled-origin cobalt from some smaller and irregular refining facilities due to the policy shift is adding fresh downward pressure to an already-weak cobalt sulfate market, sources said.
To alleviate overcapacity in its battery recycling supply chain, China officially implemented a nationwide regulatory framework on April 1, 2026, named the Interim Measures for the Management of Recycling and Comprehensive Utilization of Waste Power Batteries for New Energy Vehicles.
The policy will govern how used power batteries from new energy vehicles (NEVs) must be recycled, tracked and safely processed, according to an announcement by the Ministry of Industry and Information Technology (MIIT).
The regulatory changes have already begun to reshape market behavior, Fastmarkets heard.
Sources said that some illegal battery shredding facilities have moved to clear black mass inventories in recent weeks — fearing tighter enforcement on their operations — thereby releasing additional material into the spot market.
“We saw more offers in the market for black mass, which put payables under pressure,” a Chinese recycler source told Fastmarkets.
Payables for NCM black mass in Chinese domestic market dropped again over the past week, with the latest deals of NCM black mass heard at payables of 74-75% DDP China for nickel, cobalt and lithium, narrowing down from 74-76% DDP week on week.
Recent bids for such material were heard at payables no higher than 74% DDP China for nickel, cobalt and lithium this week.
Fastmarkets’ weekly assessments of the black mass, NCM, payable indicator, nickel, ddp China, % payable Fastmarkets’ nickel sulfate min 21%, max 22.5%; cobalt 10ppm max, exw China and of the black mass, NCM, payable indicator, cobalt, ddp China, % payable Fastmarkets’ cobalt sulfate 20.5% Co basis, exw China stood at 74-75% on Thursday June 11, narrowing down from 74-76% week on week.
The corresponding weekly assessment of black mass, NCM, payable indicator, lithium, ddp China, % payable Fastmarkets’ lithium carbonate 99.5% Li2CO3 min, battery grade, spot price range, exw domestic China was 74-75% on Thursday, narrowing down from 74-76% week on week.
The increase in availability comes at a time of heightened uncertainty. Volatility in underlying battery metals, particularly lithium and cobalt, has left buyers and sellers cautious, according to sources.
“Even suppliers were unsure how to respond,” a second recycler source said. “Some chose to sell quickly to avoid regulatory risks, while others held back, reluctant to accept lower prices.”
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Profitability at most post-treatment hydrometallurgical companies in China has been poor due to subdued prices for refined battery materials and slow sales into the cathode supply chain, sources told Fastmarkets.
“Our company does not have strong demand for black mass at the moment. We only purchase when prices are attractive,” a third recycler source said, adding that inventory of finished products remains difficult to clear, limiting appetite for new feedstock.
The impact has extended downstream into recycled cobalt products. Market participants said growing availability of cobalt sulfate derived from recycled materials has become an increasingly significant drag on the market.
Market sources said more lower-priced recycled sulfate has been offered into the spot market recently, with some irregular recycling facilities looking to move material quickly amid the rule tightening.
The availability of these cheaper units has further undermined the price floor for cobalt sulfate, even though cobalt hydroxide supply remains constrained following the cobalt export suspension by the Democratic Republic of Congo, according to market participants.
Scrap-fed cobalt sulfate prices remain very competitive in the current market, with most offers heard in the range of 84,000-85,000 ($12,397-12,545) yuan per tonne in the week to Friday June 12, and some even lower, around 81,000 yuan per tonne for small lots.
This represents a price gap of at over 5,000 yuan per tonne — and in some cases even wider — compared with cobalt sulfate produced from cobalt hydroxide feedstock.
Fastmarkets’ weekly assessment for cobalt sulfate 20.5% Co basis, exw China was 91,000-93,000 yuan per tonne on Wednesday. Fastmarkets’ price assessment only considers datapoints for primary-feedstock material.
“There has been a very large volume of cheap cobalt sulfate flowing into the market recently, and it is now difficult to see any sulfate produced from hydroxide in spot circulation,” a cobalt sulfate producer said.
“With downstream demand still weak, the limited buying interest we see is concentrated on very low-priced material,” the producer source said. “Every week there is cheaper recycled-material sulfate in the market, which has further squeezed prices for sulfate produced from intermediates or hydroxide. As a result, very few producers are still using hydroxide to produce cobalt sulfate.”
A cobalt trader source said cheaper recycled-material sulfate had become increasingly visible in the market and was having a significant impact on overall cobalt sulfate pricing. The steady flow of lower-priced units has kept buyers’ target prices low and made it difficult for hydroxide-based sulfate producers to achieve workable margins or attract buying interest at higher offer levels.
“Lower-priced material just keeps emerging, and that inevitably makes buyers even more cautious about stepping into the market,” a second trader said.
“More importantly, buying interest itself remains extremely weak, and many buyers are still waiting to see whether even lower prices emerge,” a second producer said.
Still, a third trader cautioned that the recent wave of low-priced recycled-material sulfate may not be sustainable in the long term, noting that some material had already been pushed into the market in recent weeks and that inventory levels held by some recycling producers did not appear particularly high.
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The volume of retired power batteries in China continues to grow quickly. In 2025, the country processed more than 400,000 tonnes of spent power batteries, up by around 33% year on year, according to data from the China Automotive Technology and Research Center (CATARC).
Based on NEV adoption cycles and battery lifespans, industry estimates suggest the sector is now approaching an inflection point. By 2030, more than 2.8 million NEVs are expected to reach end of life, with battery retirements exceeding 1 million tonnes, according to CATARC.
Despite this rising supply of recyclable material, the imbalances between scrap collection and processing capacities persisted in the China market.
China’s battery recycling industry is operating at a utilization rate of 20-30% on average, sources told Fastmarkets.
A key factor behind this distortion has been the presence of informal recycling workshops.
Market participants said that these informal operators can pay above-market prices for spent batteries and sell black mass below market levels, sources said, because they avoid many safety, environmental and compliance costs borne by licensed recyclers.
“The [informal workshops] can even operate much more efficiently than larger scale companies because they don’t face any compliance requirements when shredding the batteries,” a fourth Chinese battery recycler source told Fastmarkets.
The new recycling framework, which entered into force on April 1, aims to ensure clear responsibilities for battery producers and car manufacturers for their batteries.
Battery producers and original equipment manufacturers (OEMs) must set up battery recycling service stations matching their sales volumes and accept and recycle all the batteries they are responsible for.
The government is now also operating a national traceability platform to monitor the battery’s entire lifecycle, according to the framework.
Rules for auto repair shops, battery‑swap operators and car dismantlers were also mentioned. These organizations must deliver used batteries to authorized recycling or reuse companies, or to the official recycling points of the battery and car manufacturers.
Improper disposal of used batteries was banned on April 1.
As for battery recycling points, the framework requires recycling stations to follow strict rules regarding location selection, safety measures and environmental protection requirements, along with proper equipment and handling.
Another notable shift is the removal of “cascade utilization” as a standalone classification, with regulators instead emphasizing that all reused battery products must meet uniform quality standards. The policy also bans the use of recycled batteries in certain applications, such as electric bicycles, where safety risks are considered too high.
Taken together, the measures underscore Beijing’s push to further formalize its battery recycling sector, with major consequences for both black mass and recycled metals salts markets.
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