There's currently more recycling capacity than demand, as most batteries are still fairly new, so there are relatively few "end of life" (EOL) batteries available for recycling. It also make sense for battery manufacturers to build recycling facilities, both to recover raw materials from future depleted batteries, and make use of excess materials from the production of them:
"For now, roughly half of recycling plants’ feedstock material is made up of production scrap from battery factories, including electrode offcuts and faulty cells. But over the next decade, EOL batteries will come to dominate that feedstock as battery production becomes more efficient and the availability of EOL batteries grows.
While recyclers wait for those EOL batteries to arrive, a lot of their current capacity is underused. “On a global basis, we have much more capacity than what we need,” Melin says."
Lithium-ion battery recycling goes large (acs.org)