The battery recycling market is experiencing a severe dislocation. India, emerging as a key generator of battery scrap, has imposed strict export restrictions on black mass, trapping supply domestically to support local industry. This has starved South Korean and Southeast Asian refiners of feedstock, driving payables for nickel and cobalt to record highs. With the DRC export quotas already tightening primary cobalt, the recycling sector is entering a period of fierce competition for scarce material.
India is rapidly becoming a major player in the global battery ecosystem, but its recent policy shift has sent shockwaves through the recycling market. By effectively halting black mass exports to keep critical minerals within its borders, New Delhi has removed a significant volume of feedstock from the seaborne market. This nationalism of waste is a growing trend, but India’s scale makes this move particularly impactful.
Reports indicate that hundreds of tonnes of material are stranded at ports, and the "grey market" channels that previously allowed leakage are being shut down. This creates a bifurcated market: a domestic Indian market with lower prices and abundant supply, and an international market (primarily South Korea and Southeast Asia) facing acute starvation.
The scarcity of feedstock has driven payables—the percentage of the metal value paid to the seller—to unsustainable levels. High-grade NCM black mass payables in South Korea have hit 81-87%, with some deals rumored as high as 94%. For "black powder" (a higher-grade variant), payables have exceeded 100% CIF Asia.
This creates a perilous environment for recyclers. While revenue is high due to rising underlying metal prices (especially cobalt), margins are being compressed by the exorbitant cost of feedstock. South Korean recyclers are reportedly operating at just 20-30% capacity. This dynamic favors large, integrated players who can absorb lower margins or those with captive scrap supply chains. Independent merchant recyclers face a high risk of consolidation or insolvency.
The recycling squeeze is compounded by the primary cobalt market. The DRC’s export quotas for 2026-2027 are expected to remove significant tonnage from the market, creating a deficit. This makes secondary (recycled) cobalt essential. Forecasts are that secondary cobalt’s share of supply will peak in 2026 at 12.9%. The convergence of the DRC primary supply shock and the Indian secondary supply shock is creating a hyper-bullish setup for cobalt units, regardless of their source.
Sentiment: Bullish (Black Mass Prices), Bearish (Merchant Recycler Margins) Expect black mass payables to remain elevated near historical highs through H1 2026. The supply of scrap is insufficient to feed the global build-out of recycling capacity. We anticipate a wave of M&A in the recycling sector as feedstock-starved facilities are acquired by major battery players or miners seeking to close the loop. The price of the underlying commodities—specifically Cobalt and Nickel contained in scrap—will outperform the LME metal prices due to the scarcity of immediate, non-mining supply.