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Waste batteries are "too many monks and too few porridge"! Hidden risks behind the billions level track

Publish Date: 2023.05.24

  废旧电池“僧多粥少”!千亿级赛道背后风险暗藏

  

  Recycling of waste batteries - Raw material remanufacturing - Material remanufacturing - Battery pack remanufacturing - Reuse - Cascade utilization

  

  Image source: Greenland

  

  At present, the attention to ESG in various fields is increasing, and the demand for cascade utilization in the fields of base station backup, energy storage, charging and swapping, as well as the requirement for the proportion of recycled materials in the battery manufacturing field, are constantly increasing. The demand for battery recycling is further released.

  

  Recently, domestic and foreign enterprises have increased their layout in the field of battery recycling. On May 22nd, Tianqi Co., Ltd. (002009) announced that they will work together with Hubei Ecology to promote the implementation of lithium battery recycling and comprehensive utilization projects; On May 9th, foreign media reported that Glencore plans to establish the largest battery recycling plant in Europe to seek the development of its natural resources business; On May 8, Tesla officially broke ground on its lithium refinery in Corpus Christi, Texas, which will also be involved in processing other intermediate lithium raw materials, such as raw materials for recycling batteries and manufacturing waste; On May 7th, SK Ecoplant announced that it will establish and operate an 8000 square meter waste battery recycling and pre-treatment facility in the Yancheng Development Zone of Jiangsu Province with a local Chinese joint venture legal entity, and strengthen cooperation with existing waste battery facilities in Shanghai.

  

  Hundreds of billions of tracks are becoming increasingly popular

  

  Recently, research institutions EVTank, Ivy Economic Research Institute, and China Battery Industry Research Institute jointly released the "White Paper on the Development of China's Waste Lithium Ion Battery Recycling, Disassembly, and Cascade Utilization Industry (2023)". According to the white paper data, the actual recycling volume of waste lithium-ion batteries in China in 2022 was 415000 tons, a year-on-year increase of 75.8%.

  

  The two main methods of power battery recycling are cascade utilization and disassembly recycling. Among them, lithium iron phosphate battery is still mainly used for cascade utilization, while batteries including ternary and lithium cobalate are more used for recycling, dismantling and recycling.

  

  EVTank stated that in 2022, the recycling, dismantling, and cascade utilization industry of waste lithium-ion batteries showed an explosive growth trend of both quantity and price, with the entire industry market size increasing to 15.44 billion yuan, a year-on-year increase of 182.8%.

  

  EVTank predicts that by 2030, the market size of the entire industry will exceed 100 billion yuan, reaching 105.36 billion yuan, and the actual recycling volume will be closer to the theoretical value.

  

  Recently, CITIC Construction Investment also released a research report analysis stating that the installed capacity of new energy vehicle power batteries in China was 16GWh in 2015, doubling from 2021 to 295GWh in 2022, with a CAGR exceeding 50%. Based on the estimated battery service life of 5-8 years, power battery recycling is expected to enter an accelerated period of industry development in the post cycle of new energy vehicles. It is expected that the number of scrapped power batteries will increase sharply around 2026, with a total scrapped amount exceeding 100GWh, After 2032, it is expected to enter the TWh era, with a CAGR of 33% from 2022 to 2035, and the power battery recycling industry will maintain a long-term prosperity.

  

  According to CITIC Construction Investment, it is estimated that the power battery industry will have a market space of 100 billion yuan around 2030, and the recycling channels, technology, qualifications, and scale of enterprises will be the core competitiveness of the industry.

  

  According to the Price Cost Survey Center of the National Development and Reform Commission, based on the estimated 4-8 year service life of power batteries, new energy vehicle power batteries installed on a large scale in China around 2017 will also enter a recycling and release period this year. At the same time, driven by the significant increase in the price of lithium carbonate, the prices of waste power batteries have also "skyrocketed". Some companies have reported that the discount coefficient of some batteries (the ratio of waste price to new goods price) has increased from a minimum of 60% in 2021 to over 100% in 2022. Especially with the large-scale expansion of power battery installation, the contradiction between supply and demand of lithium resources will further intensify, and the market value of power battery recycling will also become more prominent. According to research institutions, the market size of power battery recycling in China will reach 140.6 billion yuan by 2030, an increase of nearly 9 times compared to the actual market size in 2022.

  

  In terms of enterprises, the current battery recycling and utilization chain is long, with multiple links and a wide range. There are many market participants, mainly including car companies, battery companies, material companies, third-party recycling companies, etc. There are also some cross-border enterprises entering this track. Among them, most of China's major power battery companies have already established a presence in the field of battery recycling.

  

  According to EVTank's statistics, the companies that ranked high in the market share of cascade utilization in 2022 were mainly BYD, Tianci Materials, Guanghua Technology, Huayou Recycling, Greenway, Bangpu Recycling, Ganfeng Recycling, etc. The companies that ranked high in the market share of recycling and dismantling in 2022 were Bangpu Recycling, Ganfeng Recycling, Jintaige, Huayou Recycling, Greenway, Guangdong Jinsheng, Hengchuang Ruineng, Times Zhongneng, etc.

  

  In addition, battery recycling is also highly favored by capital. According to incomplete statistics from Battery Network, since 2022, several battery recycling industry chain enterprises have successively announced the completion of large-scale financing, including Guangdong Jinsheng, Shunhua Lithium Industry, Saidemai, Bocui Recycling, Hengchuang Ruineng, Power Recycling, Jiecheng Nickel Cobalt, Rongtong High Tech, Jinyuansheng, Ruilong Technology, Daotong New Energy, and Singularity Energy.

  

  Positive policies continue to increase

  

  At the same time, favorable policies in the field of battery recycling are also continuously increasing.

  

  The Ministry of Industry and Information Technology has released four batches of white list enterprises for battery recycling, with a total of 88 enterprises. According to the latest information displayed on the official website of the Ministry of Industry and Information Technology, there are currently nearly 14600 new energy vehicle power battery recycling service outlets.

  

  On March 2nd, the State Administration for Market Regulation and the Ministry of Industry and Information Technology announced that the Administration for Market Regulation and the Ministry of Industry and Information Technology had decided to carry out voluntary certification of new energy vehicle power battery cascade utilization products, improve the power battery cascade utilization market system, and promote the healthy and orderly development of the power battery cascade utilization industry. Encourage areas with conditions to accelerate the construction of resource recycling systems and use certified cascade utilization products in government investment projects, key projects, and municipal public works.

  

  On March 1st, the State Administration for Foreign Affairs held a series of themed press conferences on the "Opening of Authoritative Department Talks". At the meeting, Vice Minister of Industry and Information Technology Xin Guobin stated that it is necessary to improve the recycling and utilization system, strengthen key technology research such as intelligent disassembly, and improve the recycling and utilization level of power batteries.

  

  Battery Network has noticed that since the beginning of this year, the Energy Conservation and Comprehensive Utilization Department of the Ministry of Industry and Information Technology has organized two symposiums on the recycling and utilization of new energy vehicle power batteries, proposing to quickly develop recycling management methods and refine the responsibilities of all parties; Increase the promotion of comprehensive utilization of advanced technologies, and drive industrial upgrading through technological innovation; Promote typical experience and practices, cultivate and strengthen backbone enterprises, and improve the level of power battery recycling and utilization.

  

  It is reported that the current power battery recycling regulations in China are the "Interim Measures for the Management of the Recycling and Utilization of New Energy Vehicle Power Batteries", which were implemented in August 2018. This method clarifies the responsibilities of all relevant parties, based on the coding standards and traceability information system of power batteries, to achieve traceable sources, traceable destinations, controllable nodes, and accountability of power battery products. It constructs a full lifecycle management mechanism, promotes the establishment of sound standards and regulatory systems, and promotes the healthy and sustainable development of power battery recycling and utilization.

  

  With the expansion of the scale of power battery recycling, it is urgent to standardize the recycling of power batteries.

  

  In the "2023 Rulemaking Work Plan" released by the Ministry of Industry and Information Technology on April 18th, the "Management Measures for the Recycling and Utilization of New Energy Vehicle Power Batteries" is a project that needs to be drafted and submitted for review in a timely manner within the year.

  

  Battery recycling chaos to be resolved

  

  Although the battery recycling market has broad prospects and receives strong policy support, it also faces many challenges.

  

  Yu Qingjiao, Secretary General of the Zhongguancun New Battery Technology Innovation Alliance and Chairman of the Battery Hundred Association, stated that battery recycling and cascade utilization are still in the early stages of commercialization, and the scale of lithium, cobalt, nickel and other resources recycling and reuse is small, with continuous industry chaos and low economic benefits; Most enterprises have extensive recycling methods, low material sorting and recycling rates, and severe waste of batteries with low recycling value; And there are secondary pollution issues and safety hazards associated with violent dismantling; The relevant industry standards and policies and regulations are still in the exploratory stage; There are many problems such as uneven quality of batteries in tiered utilization, high costs, non-standard management, and small profit margins.

  

  During this year's two sessions, Liu Jingyu, Chairman of China Innovation Airlines (03931. HK), stated that currently, there are still issues in the field of power battery recycling, such as unclear consumer destinations leading to retired power batteries flowing into informal channels, inadequate dismantling and recycling methods and recycling scale leading to environmental hazards and insufficient economic value. On the other hand, resource issues have become potential factors affecting industrial development.

  

  Greenway (002340) recently stated during research that black powder, as an important product of battery recycling, can be sold as a product or used as an intermediate in the manufacturing of battery materials. Due to the different metal content and types of black powder produced by different types, there are differences in the processing procedures and processes of the superimposed enterprises, and the black powder market is still in a period of non standardization.

  

  In addition, the quotation for recycling waste batteries is also relatively chaotic.

  

  According to SMM data, in the first quarter of 2023, the recycling price of waste lithium batteries followed the decline of lithium carbonate prices, and players in the recycling industry chain were not optimistic about downstream demand. The overall recycling market entered a stagnant situation, and the market was relatively pessimistic. In late April 2023, lithium carbonate rebounded from its decline, and the price of used lithium batteries rose along the trend. However, downstream material and battery cell demand did not show a significant recovery, and the expected disconnection of various links in the recycling industry chain.

  

  SMM analysis shows that in the past half month, due to upstream waste traders hoarding goods and driving up prices, the high price of raw materials has exceeded the cost bottom line of smelters. The demand for downstream nickel cobalt salt market has not significantly recovered, and the price of nickel cobalt products is inversely linked to the cost of raw materials. The synchronization of nickel cobalt coefficient and lithium coefficient is actually carrying the cost of lithium. Various irrational factors have made downstream smelting enterprises take a wait-and-see attitude towards high prices, The demand for a return to rationality in prices is rapidly spreading in the recycling market. On May 19th, upstream battery traders began to show a willingness to inquire downstream for shipment, despite being unable to ship their products in the early stages. At present, downstream smelting enterprises have a relatively firm attitude of not being eager to purchase, and the prices of ternary and iron lithium waste in the recycling market are expected to be further lowered.

  

  In response, the Price Cost Investigation Center of the National Development and Reform Commission suggests that: firstly, accelerate the formulation of laws and regulations on the recycling and utilization of power batteries; Secondly, establish a standardized system for the recycling and utilization of power batteries in the industry; Thirdly, accelerate the innovation and research and development of key core technologies; The fourth is to optimize the layout of the recycling and utilization industry according to local conditions.

  

  Yu Qingjiao suggested that from the perspective of enterprises, firstly, it is to innovate recycling technology, improve the recovery rate of lithium, cobalt, nickel, etc., and reduce costs; The second is to open up recycling channels, for example, some battery recycling companies and industry chain partners adopt business models such as "leasing and selling tiered batteries" and "exchanging waste for materials" to open up the material manufacturing and retired power battery recycling links, and obtain more stable and low-cost waste batteries; Thirdly, the increase in production capacity scale. In theory, the larger the production capacity scale, the higher the profit; The fourth is to ensure the safety and environmental protection of the battery recycling and reuse process.

  

  From a policy perspective, Yu Qingjiao suggested that firstly, top-level planning should be carried out at the national level to simultaneously strengthen support policies and regulatory policies, and standardize the battery recycling industry; The second is to improve standards for battery recycling, transportation, and storage, innovate technology and business models, increase the recycling rate of related materials, and enhance the profitability of enterprises; Third, strictly control formalism, promote the implementation of relevant demonstration projects step by step, adapt measures to local conditions, and guard against the blind start of local cascade utilization projects.

  

  Liu Jingyu suggested conducting top-level planning for the battery recycling system, led by power battery companies, to develop battery recycling routes from the source of product design and establish an efficient battery recycling system; Develop standard specifications for the recycling process to ensure low-carbon, environmentally friendly, efficient, and economically valuable recycling; Priority should be given to supporting power battery enterprises with the ability to manage big data throughout the entire life cycle of power batteries, and mastering low energy consumption and zero pollution material regeneration technology for industrial layout.

  

  During this year's two sessions, Zeng Yuqun, Chairman of Ningde Times (300750), also proposed to take the "dual carbon" goal as the guide, leverage the advantages of China's complete industrial chain and rich application data, and research and design China's battery passport based on practical management needs such as carbon footprint, ESG, recycling traceability, and tiered utilization, and use it as a digital management tool for the entire lifecycle management of China's battery industry.

  

  Conclusion: Recently, with a mixture of multidimensional and complex elements, lithium carbonate has fluctuated into the normal state. Since the end of April this year, the price of battery grade lithium carbonate has continued to rise from the bottom area of 180000 yuan/ton, and returned to 300000 yuan/ton in mid May. But starting from this Monday, the rise in lithium carbonate prices has slowed down. From the survey of battery network, with the improvement of enterprise layout enthusiasm, there is no shortage of battery recycling capacity at present, but there is a lot of waste batteries. At the same time, due to the price of lithium carbonate, market hype and other factors, the battery recycling market is also changing, and the investment risk is high.

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