Falling lithium prices weigh on black mass prices in China

Prices for black mass material from process scrap fell by 5% in July from a month earlier, according to Benchmark’s inaugural black mass price assessment, due to a decline in the underlying prices for lithium.

The weighted average black mass price from all process scrap feedstocks as traded in the Chinese market was last assessed at RMB 98,369/tonne ($13,666), down 5% from a month earlier to a “significant erosion in lithium iron phosphate (LFP) scrap values.”

That compares to a price of RMB 67,283 ($9,348) a tonne for aggregated, weighted average black mass prices from all end-of-life feedstocks.

The lower prices will put increasing pressure on the margins of recycling companies, who are selling material into a falling lithium market. Prices for battery grade lithium carbonate in China have fallen by 47% year-to-date, according to Benchmark.

Some recyclers are accepting balance sheet losses in the near term, in order to establish long-term relationships with black mass producers, according to Benchmark.

“Black mass traders in July reported that liquidity during the month was notably low, which they attributed to low lithium chemical prices in the virgin market,” according to Benchmark’s Black Mass Price Assessment.

Process scrap makes up the majority of the global scrap pool in China, due to the large number of battery gigafactories in production. Scrap from end-of-life batteries is not set to make up a meaningful supply until the early to mid 2030s, according to Benchmark.

Recyclers generally pay for material as a payable of the battery chemical prices for black mass material, although lithium from lithium iron phosphate (LFP) feedstock is priced differently, as a fixed price per percentage point of lithium.

Benchmark’s LFP feedstock price, measured as lithium price per percentage point of content, fell by 11.6% in July to RMB 9,500-11,000 ($1,330-1,540).

Process scrap is more expensive than end-of-life scrap because of the higher chemical content of valuable metals. As a result payables are higher than for EOL scrap.

As such, movements in the underlying virgin markets impact weighted average black mass from process scrap prices to an increased degree compared to EOL feedstocks.

While black mass prices historically followed cobalt prices, their movement is now dominated by lithium prices, according to Benchmark.

Lower lithium prices

Chinese battery grade spot lithium carbonate prices fell by 10% in July, according to Benchmark’s Lithium Price Assessment, to RMB 279,000 a tonne ($38,834), due to weaker demand from cathode producers.

That has put pressure on margins of recycling companies in China.

The fall in lithium prices resulted in a significant change in payables from NCM feedstock, which fell by 5.7% from June to an average of 74.5%. This yields a derived chemical price for lithium carbonate equivalent (LCE) from NCM black mass of $31,100/tonne, which is an 8.3% decrease on June values.

Derived lithium prices from LCO cathode black mass in LCE terms declined by 0.8% to $31,347/tonne on an EXW China basis, driven by bearish underlying lithium prices in the virgin market.

HIgher cobalt prices offset decline

Still, higher cobalt sulphate prices in China lifted cobalt payables in the market.

Cobalt prices have increased in China due to constrained supplies of cobalt hydroxide from the Democratic Republic of the Congo, due to logistical issues.

Cobalt payables from NCM feedstock ranged 71-78% in July, with the low end reflecting trades from end of life (EOL) scrap and the high end reflecting trades from process scrap.

This yielded an equivalent chemical price for cobalt sulphate from NCM black mass of $4,632/tonne in July, some 15% higher than prices in June. This increase was driven by higher prices in the underlying market value for virgin cobalt sulphate in the EXW China market.

Payables from LCO feedstock cobalt sulphate increased in July to an average of 75.0%. Coupled with a firmer underlying virgin cobalt sulphate market, this gave an equivalent cobalt sulphate from LCO black mass in the EXW China market of $4,678/tonne – an 18.1% increase against June’s assessment.

Learn more about Benchmark’s new Black Mass Price Assessment service:

To speak to our team to learn more about this new service and to see a sample price report, please provide your details here: