Lithium prices have risen in a year from around $8 to $22, halting a decline in secondary battery raw material prices that has lasted nearly 3 years. As selling prices recover for resource recycling companies that extract and resell metals from used batteries, forecasts are emerging that a loss-making phase lasting more than 10 quarters will enter a profit-turnaround range. New lithium mine operations by China’s CATL are scheduled for the second half, leaving whether the improvement in selling prices can be maintained dependent on supply-side variables.

As of Aug. 7, the industry said nickel rose from $15,275 per ton in February last year to $17,664 in June this year. Cobalt rose the most, climbing from $33,406 per ton in September 2025 to $55,854 over the same period. Lithium also formed a bottom between May and July last year and then rose in steps to $16 in January this year, $19 in March and $22 in May. All three metals broke out of a downtrend that had continued since early 2023. From the previous quarter, lithium rose 19.9 percent and nickel gained 5.0 percent.

Changes in price levels feed directly into recyclers’ profit and loss. Recycling companies buy used batteries and process scrap, extract lithium, nickel and cobalt, and resell them. The market prices of extracted metals become the average selling price. Purchase prices for scrap, which are the cost side, are often reflected with a lag. That is why the gap between purchase and selling prices widens when metal prices rise after a trough. Losses the industry suffered from 2023 through the first half of 2025 were the result of this mechanism working in reverse.

The issue is the recent direction. Lithium rose to $24.1 per kilogram in May and then fell 11 percent from the peak to $21.6. Nickel in June also fell 6 percent from the previous month. Hana Securities analysed that the current lithium price remains above the end of the first quarter and that the recent decline does not cause downward revisions to earnings estimates. It said market earnings estimates assume lithium prices in the high teens, so the pullback after a short-term surge in the second quarter is not enough to shake estimates.

Forecasts are therefore emerging that South Korean used-battery recycling companies will pass quarterly break-even point in 2026 and enter a profit-turnaround phase. The securities industry judges that they have entered a phase where fixed-cost burdens ease as utilisation at new plants rises alongside a recovery in selling prices. As they continued capacity expansion even during losses, the portion of incremental sales that flows through to profit is relatively large when utilisation reaches normal levels.

◆ Recycled-material certification scheme in 2027...building a verification system for material flows by process stage

A profit turnaround by cell makers has already been confirmed. LG Energy Solution said it returned to profit after 2 quarters with operating profit of 113.3 billion won in the second quarter of 2026, and Samsung SDI reported operating profit of 203.8 billion won, its first profit in 7 quarters. Both companies pointed to demand linked to AI data centres, including power ESS and uninterruptible power supplies (UPS) and battery backup units (BBU), as factors behind the turnaround. Utilisation also rose. Samsung SDI said higher utilisation came as sales of high-output batteries for power tools increased and new products were launched. LG Energy Solution cited improved utilisation in Europe as a factor behind its second-quarter profit improvement.

Rising cell production is directly tied to recyclers’ raw material base. The industry said that in a phase when actual inflows of used batteries have not yet fully materialised, the volumes recyclers process have a high proportion of scrap from cell manufacturing. The composition of raw materials is changing, however. LG Energy Solution presented plans to expand ESS production capacity focused on pouch lithium iron phosphate (LFP) this year, and Samsung SDI set out preparations for mass production of prismatic LFP in the United States in the second half. LFP does not use nickel and cobalt, so even if scrap volumes rise, the unit-price mix of extracted metals could fall.

Rising cobalt prices are a separate variable. Cobalt’s pace of gains accelerated from the second half of 2025, rising in less than a year from the $30,000 range per ton to the $50,000 range. The introduction of export quotas by the Democratic Republic of Congo is cited as a backdrop. Cobalt has a high unit price among extracted metals and accounts for a large share of domestic recyclers’ revenue. Even as lithium prices undergo a correction, cobalt selling prices have come to support overall margins.

The policy environment is also tilting toward recycled materials. The Ministry of Climate, Energy and Environment has launched a pilot project for a Battery Recycled Material Production Certification System with six domestic used-battery recycling companies, including SungEel HiTech, EcoPro CNG and POSCO HY Clean Metal. The scheme, scheduled to take effect in May 2027, aims to build a system to verify material flows and quantitative changes at each process stage. Once the history of recycled materials is officially certified, it becomes a basis to meet procurement requirements of automakers and cell makers.

The outlook splits in two depending on whether supply resumes in the second half. China’s lithium carbonate futures price fell from 200,000 yuan per ton to around 157,000 yuan as the possibility of restarting CATL’s Jianshawo mine came into focus, and Hana Securities said CATL’s licensing procedures for a new lithium mine have been completed and operations are expected in the second half.

Because prices for recycled metals are set in the same market as mined metals, expanded mine output quickly translates into selling-price pressure for recyclers. If output increases proceed as planned, the improvement in selling prices narrows and the timing of a profit turnaround is pushed back. If operations are delayed, the period lengthens in which scrap bought when purchase prices were low is processed when selling prices have recovered. The industry said recyclers are reflecting lithium prices conservatively in future earnings plans.