Potential benefits at the policy level of lithium battery recycling

In its latest research report, CITIC Securities expressed a positive view on the battery recycling industry and pointed out several positive changes that the industry is currently facing. 

These changes are mainly reflected in the supply side, price side, and technology side, while also looking forward to potential policy benefits.

CITIC Securities pointed out that the profitability of battery recycling is sensitive to parameters such as lithium recovery rate, discount coefficient, and lithium price. 

In the context of stable lithium prices, companies with higher lithium recovery rates have stronger profitability.

1. Supply side optimization

With the suspension of qualification applications for battery recycling "whitelist" and the subsequent tightening of supervision, 

the production capacity of "small workshops" and gray areas in the industry is expected to gradually be cleared under regulatory pressure, 

which will increase the market share and capacity utilization rate of legitimate recycling enterprises. 

This change will help optimize the supply pattern of the battery recycling industry, enhance the overall standardization and competitiveness of the industry.

2. Price stability

Against the backdrop of stabilizing lithium prices, the narrowing of the price difference between futures and spot will help stabilize the price system for battery recycling and boost industry operating rates.

 In addition, the emergence of innovative cooperation models such as "exchanging waste for raw materials" has also provided stable raw material supply channels for enterprises, 

which helps to hedge the impact of metal price fluctuations and ensure the profitability stability of recycling enterprises.

3. Technological advancements

By continuously improving their recycling processes, 

leading lithium battery recycling enterprises have gradually increased their lithium recovery rates and significantly enhanced their market competitiveness. 

Technological advancements not only improve recycling efficiency,

 but also increase the metal value per unit of waste, bringing greater growth opportunities for recycling enterprises.

4 policy level benefits

By comparing European battery recycling policies and combining them with the practice of domestic capacity pricing mechanisms, 

CITIC Securities believes that future policies are expected to clarify the main responsibilities of battery recycling for battery factories and vehicle manufacturers, 

and gradually incorporate recycling costs into the battery pricing system. 

This change is expected to solve the long-standing problems of poor battery recycling channels and difficult profitability for recycling enterprises, 

and promote the healthy development of the industry.