Battery collection rates in Europe fell to 88% in Q1 2026, down from 91% a year ago, according to the European Battery Recycling Association. The US rate slipped to 92% from 94%. The decline reflects lower battery replacement volumes and logistical challenges in rural collection networks.
The collection rate decline is squeezing secondary lead smelters, which depend on scrap batteries for 100% of their feedstock. In Europe, secondary smelters are paying $1,380/mt for scrap, up 2.2% this month. The higher scrap costs are compressing secondary smelter margins and reducing their inclination to sell at deep discounts to LME.
Secondary lead accounts for approximately 55% of total global refined lead output. In the US and Europe, the share exceeds 80%. Any sustained decline in collection rates translates directly into tighter refined lead supply, as primary mining output is insufficient to fill the gap.
The scrap market tightness is structural and not seasonal. Fewer new car sales translate into fewer battery replacements two to three years out, the time it takes for an OEM battery to reach end-of-life. This pipeline effect means that collection rates may continue to decline through 2027.
The scrap squeeze is a structural support for lead prices. Buyers should not expect a return to sub-$1,800 LME lead levels, as secondary supply constraints create a rising cost floor. Forward contracts should account for a $100-150/mt premium over historical secondary supply costs.