China's Battery Recycling Market Heads Toward One Million Tonnes as New Rules Take Hold

BEIJING — China's lithium-ion battery recycling sector is on track to process more than one million tonnes of retired batteries and scrap this year, nearly doubling 2024 volumes, as a wave of mandatory regulations forces the industry to consolidate and standardize.

The milestone, detailed in a Mysteel analysis released this week, marks a turning point for the world's largest battery recycling market. Retired battery volumes hit 819,000 tonnes in 2025, up 90.5 percent from the prior year, while total recycled volume reached 301,668 tonnes. But the real shift comes from Beijing's new Administrative Measures for Battery Recycling, which took effect in April and mandate integrated vehicle-battery retirement, full-chain traceability, and producer responsibility.

"Supply has continued to fall short of demand, and downstream manufacturers have faced limited access to battery scraps," the Mysteel report states. "The new regulations will significantly reduce non-compliant channels, accelerate industry consolidation, and eliminate small-scale, unregulated workshops."

The Numbers Behind the Surge

The scale of China's battery retirement wave is staggering. The China Automotive Power Battery Industry Innovation Alliance estimates that retired power battery volumes reached roughly 600,000 tonnes in 2024 and were expected to hit 800,000 tonnes in 2025 — figures that align closely with Mysteel's 819,000-tonne tally. By 2030, the alliance projects volumes could exceed five million tonnes annually, a trajectory that would make China the undisputed center of global battery circularity.

Mysteel's breakdown shows the composition shifting in ways that reflect the evolving chemistry of China's EV fleet. Ternary (NCM/NCA) scrap rose to 140,342 tonnes, up 18.7 percent year-on-year. Lithium cobalt oxide (LCO) scrap grew 20.5 percent to 10,594 tonnes, driven by consumer electronics retirements. Lithium iron phosphate (LFP) scrap, however, dipped 2.7 percent to 150,732 tonnes, reflecting the newer vintage of LFP packs still in service — most LFP-equipped EVs sold in China over the past three years have not yet reached end of life.

Price volatility has been extreme, creating both risk and opportunity for recyclers. Cobalt chemical prices surged 247.7 percent in 2025, lithium chemicals rose 57.4 percent, and nickel salts climbed 5.6 percent. Ternary cathode powder (523-type) jumped 69.4 percent. LCO cathode powder recorded the wildest swing — 222.3 percent annual volatility — making it the most speculative segment of the scrap market. Hydrometallurgical plants have responded by flexibly utilizing financial tools for price-point transactions, effectively safeguarding profit margins and alleviating price inversion phenomena.

New Rules Reshape the Playing Field

The Administrative Measures, issued jointly by the Ministry of Industry and Information Technology (MIIT), the Ministry of Ecology and Environment, and the State Administration for Market Regulation, represent the most comprehensive regulatory overhaul to date. They require automakers and battery producers to establish recycling service networks covering all prefecture-level cities, implement digital traceability from cradle to grave using a national unified platform, and ensure retired packs enter licensed channels rather than informal workshops.

A parallel policy shift opened the door to black mass imports starting August 1, 2025. Black mass — the shredded, metal-rich intermediate from battery shredding containing lithium, nickel, cobalt, and manganese — can now be brought in from overseas to feed China's hydrometallurgical refineries. The first 20-tonne shipment, imported by Zihuan Green Investment International under China Recycling Development Corporation, cleared Ningbo customs in mid-August 2025, proving the mechanism works.

"This import channel somewhat alleviated raw material concerns for hydrometallurgical plants," Mysteel notes. With domestic scrap supply still tight relative to refining capacity, imported black mass is expected to become a meaningful supplement in 2026, creating a new trade flow that links collection networks in Europe and North America to China's processing scale.

From Wild West to Concentrated Industry

For years, China's battery recycling sector grew faster than its rules. Hundreds of small operators — some little more than backyard shredders — competed for scrap with little regard for environmental standards or worker safety. The new licensing regime, combined with a points-based management system for "whitelist" enterprises slated for full implementation by end of 2027, aims to end that era.

Large, integrated players like Brunp Recycling (a CATL subsidiary), GEM, and CNGR are positioned to benefit. Brunp became the first company globally to ship one million tonnes of ternary precursor materials in May 2025, a milestone that underscores its vertical integration from recycling through to cathode production. GEM and Ascend Elements are building a full European recycling chain spanning dismantling, black mass extraction, and new cathode manufacturing. CNGR has partnered with Belgium's revomet on a 28,000-tonne joint venture that will blend European scrap with Chinese refining expertise.

"The market will transition from rapid, unregulated growth to a more standardized and concentrated phase, driven by intense competition for raw materials and technological upgrades," the Mysteel report concludes.

What This Means for Global Supply Chains

China processes the lion's share of the world's retired lithium-ion batteries. As its domestic volumes swell and regulations tighten, the ripple effects will reach every automaker and battery supplier with exposure to the Chinese market — which is to say, nearly all of them.

Foreign automakers selling in China must now demonstrate compliance with the integrated retirement and traceability requirements, effectively extending Chinese regulatory reach into global production networks. Battery makers sourcing cathode precursor from Chinese refiners will face tighter documentation demands, including proof that upstream scrap entered through licensed channels. And the growing black mass import trade creates a new arbitrage channel: regions with mature collection but limited refining capacity (Europe, North America) can ship intermediate product to China's massive hydrometallurgical base.

The Mysteel forecast for 2026 scrap pricing gives a glimpse of the new equilibrium. Ternary cathode powder discount coefficients are projected at 75–83 percent of metal salt value. LCO cathode powder at 80–92 percent. LFP lithium-point prices are seen at 5,800–8,000 yuan per lithium point. These ranges suggest a market where supply is still tight but no longer chaotic — a marked contrast to the 2025 volatility that saw cobalt prices swing by nearly 250 percent.

The Road to Five Million Tonnes

If the alliance's 2030 projection of five million tonnes holds, China's recycling infrastructure will need to scale roughly six-fold from 2025 levels in five years. That implies massive capital deployment — not just in shredding and hydrometallurgical capacity, but in the digital traceability systems, collection logistics, and standardized dismantling facilities the new rules demand.

MIIT's ongoing consultation on a compulsory national standard for the safety technical specification of traction battery dismantling and crushing, which ran through August 2025, signals that technical standards are next. The Wuhan Joint Innovation Laboratory for Low-Carbon Circular Economy of Power Batteries has already released AI-driven full-chain digitalized recycling solutions, hinting at the technology stack the industry will adopt. Meanwhile, the Battery Recycling Spring Insight Tour in April 2026 brought over 20 international participants to visit four leading Chinese recycling enterprises, showcasing the scale and sophistication the sector is rapidly achieving.

For now, the message from Beijing is clear: the free-for-all is over. The companies that invested early in licensed, traceable, environmentally sound recycling capacity will capture the lion's share of a market that is about to become the world's largest — and most regulated — battery circular economy.

Sources: Mysteel analysis: China lithium-ion battery recycling market 2026 outlook & 2025 review

Internal links: Battery Tech, EV

Keywords: battery recycling, lithium-ion, China, black mass, CATL, GEM, Brunp Recycling, circular economy, Administrative Measures, hydrometallurgical