Key takeaways from China li-ion Battery Recycling Week 2023

The outlook of the global electric vehicle (EV) market, the importance of battery recycling and challenges in battery value chains were among the key topics discussed at the China International Lithium-ion Battery Recycling Week held in Shanghai on May 15-19

Delegates from top-tier car manufacturers, battery cell companies, battery recycling firms and trading houses traveled to the event from more than 22 countries, including the United States, India, South Korea, Japan, France and Sweden. They shared insights on the battery recycling industry amid the EV boom and the growing importance worldwide of a circular economy.

Fastmarkets presents three key things we learned at the conference.

China continues to dominate the global EV manufacturing sector

Most delegates at the battery recycling event believed that the importance of China as an EV manufacturing country will keep increasing at a rapid rate.

Some 67% of the light electric vehicles (LEVs) placed on the global market in 2022 were produced in China, which is equal to almost 6 million LEVs, according to Hans Eric Melin, managing director at London-based Circular Energy Storage Research and Consulting.

China’s new energy vehicle (NEV) industry has entered a stage of explosive growth. Yi Deng of China’s Ministry of Ecology and Environment (MEE) said that the production and sale of NEVs in 2022 were 7.06 million and 6.89 million respectively, up by 96.9% and 93.4% year on year.

In 2025, the number of NEV sales is expected to exceed 25 million globally, while sales in China may exceed 13 million, according to Yi.

As a result, the production and installation of batteries have increased significantly in recent years.

In 2022, the total production volume of batteries in China was 545.9 GWh, up by 148.5% year on year, while the installation volume on vehicles was 294.6 GWh, up by 90.7% year on year, Yi said, citing data from the China Automotive Battery Innovation Alliance.

China’s share in the global EV market will grow not only because of the popularity of EVs in its domestic market, but also due to an increase in exports to Europe and emerging EV markets, Melin said. Circular Energy Storage has forecast that the percentage of batteries installed in LEVs made in China and placed on the European market will reach approximately 25% in 2029.

“The export of EVs has reshuffled the end-of-life (EOL) volumes globally,” Melin said.

It will put pressure on the European recycling market because that market has smaller volumes of scrap from cell and pack manufacturing and it will be facing more direct competition from the Asian EOL market, he added.

Rate of capacity utilization in China’s battery recycling industry still too low

“Today’s EV [production] is generating tomorrow’s EOL market,” Johan Fridner, electrochemical specialist at Norsk Hydro said. “With recycling, we avoid batteries becoming waste or [being] sent to landfill and reduce dependence on mining for fresh raw materials. As battery use rises, the importance of recycling will increase.”

China’s NEV market has been developing rapidly since 2015. With the lifespan of batteries normally being 5-8 years, a large number of batteries have already started to retire from 2018-2019 in China, according to MEE’s Yi.

As of October 2022, there are 61 existing and proposed new waste lithium-ion battery recycling and processing companies in China. The planned capacity of waste power lithium battery processing which has passed Environmental Impact Assessment was 1.96 million tonnes, while these companies have planned battery processing capacity exceeding 4 million tonnes, according to Yi.

“The capacity utilization rate in the [Chinese] battery recycling industry is incredibly low judging from the current market landscape,” Yi said.

“Ideally, if we can recycle the waste batteries efficiently, it is estimated that the recycled materials can supply 20-25% of China’s demand for lithium and cobalt from 2020 to 2025. But the current volume recycled raw materials contributes only 3-6% of domestic demand,” he added.

As for the global market, Circular Energy Storage believes that the battery recycling market is, and will remain, in undersupply.

China is playing a leading role in both pre-processing capacity and material recovery capacity compared with the rest of the world. But those capacities are still much lower than the volume of scrap available in the global market, Melin said.

Still challenging to capture value from used batteries in battery circular value chain

The EOL market is extremely fragmented, and important industry data such as for battery health is mostly inaccessible, incomplete and unreliable, Fastmarkets heard.

These factors have caused difficulty in capturing more value from used batteries, according to William Bergh, the founder and chief executive officer of Stockholm-based Cling, a circular startup promoting sustainability and resilience in the battery supply chain.

Batteries out of warranty will dominate the market, Melin said. In 2030, a total of around 95 GWh EOL batteries will be available for reuse on the global market. Only around 20 GWh of them would still be in warranty, with the rest all coming from write-offs.

There are various destinations where EOL batteries can be reused. For example, they can be re-manufactured by established professional organizations if the EOL batteries are still qualified for in-warranty replacements. They can also be used in stationary energy storage where startups can produce power packs. EOL batteries can also be used as substitutes for lead-acid batteries.

Most delegates believed that it is important to consolidate the value chain by providing more efficient logistics, clearer regulations and more price discovery tools.

Fastmarkets launched its weekly price assessments for black mass payable indicators, delivered South Korea, to provide insight to Asia’s burgeoning battery recycling sector. South Korea is one of the major importing nations of EOL EV black mass, as well as a significant importer of EOL scrap batteries for processing into black mass within its growing domestic market.

Fastmarkets’ latest assessments of the black mass, NCM/NCA, payable indicator, cobalt, cif South Korea, % payable Fastmarkets’ standard-grade cobalt price (low-end), and the black mass, NCM/NCA, payable indicator, nickel, cif South Korea, % payable LME Nickel cash official price, were both 61-68% on Wednesday May 31, narrowing upward from 60-68% a week earlier.

It is also important to find a balance between battery reuse and recycling, Akihito Fujita, principal at Nomura Research Institute noted.

Battery reuse is more profitable than recycling from original equipment manufacturers’ perspective, but reuse is not the solution to sustainability, according to Akihito.

Want more insights and forecasts for the battery recycling market?

Keep up to date with global market insights and predictions for the battery recycling market with the Fastmarkets NewGen Battery Recycling Outlook.

What to read next
Fastmarkets spoke with Canada-based Northern Graphite CEO Hugues Jacquemin on North American graphite, the electric vehicle (EV) industry and the need for a North American supply chain on Wednesday July 17
Rapidly expanding capacity for the recycling of lithium-ion batteries in the United States and Canada has raised worries over the supply of raw materials to feed processors in the region, sources have told Fastmarkets
Chinese mining giant CMOC reported a 178% year-on-year increase in cobalt metal production for the first six months of 2024, according to an announcement by the company on Friday July 12
Analysis by UK-based industry group ChargeUK shows that there are now more than 930,000 public, home and workplace charging points for electric vehicles (EVs) across the nation, supporting 1.1 million such vehicles
Aluminum scrap generation in Europe is expected to decrease in the current quarter due to lower demand from downstream metal producers amid the domestic seasonal summer slowdown, according to the latest market overview from the Bureau of International Recycling (BIR)
China’s nickel-cobalt-manganese (NCM) battery output in June registered fell to 20.5 gigawatts hours (GWh), down by 1.5 GWh, or 6.8%, from the 22 GWh in May, and down by 3.7 GWh, or 15.3%, from the 24.2 GWh in March, according to the data from China Automotive Battery Innovation Alliance (CABIA)