Secondary refined lead production continues to operate at low levels, August expectations below 150,000 mt?

In July, secondary refined lead production recorded 169,400 mt, down 12.75% MoM, marking the second-lowest level this year, with the extent of production cuts clearly exceeding earlier market expectations.

Although imported crude lead cargoes provided some raw material supplementation, they were unable to broadly lift output in the refining segment. Lead prices continued to weaken in July, while scrap battery costs remained rigid. Smelters endured prolonged losses, curbing refined production willingness.

Looking to August, secondary refined lead production is expected to remain at low levels, in the range of 140,000-160,000 mt. As production resumption expectations concentrate in the second half of the month, overall output will follow a “low early, steady later” pattern, with no obvious uptick in the supply center. Multiple restraining factors remain dominant: the industry’s loss-making position is unlikely to improve in the short term, hindering smelter production resumptions; tight scrap battery supply persists, with many smelters facing raw material shortages, and some enterprises planning significant production cuts or even shutdowns; most smelters in north China, northwest China, and east China have already halted operations; and individual enterprises in Anhui, Hebei, and Guizhou plan maintenance in August. The inertia of low operating rates will extend into early August.

Meanwhile, some marginal growth support exists. Imported crude lead orders concluded from May to July, with extended shipping schedules, will gradually arrive at ports in August, partially offsetting the scrap battery raw material gap. The market holds expectations for the traditional peak consumption season for batteries in August-September. If lead prices stabilize above 16,000 yuan/mt, previously delayed production resumption plans may gradually be implemented. On balance, output in early August will be under pressure and subdued. In the latter half of the month, if seasonal stockpiling drives a lead price recovery and processing of imported crude lead adds growth, production may increase. Should market conditions remain sluggish, output risks falling below 150,000 mt. Going forward, key focuses will be the lead price trend, scrap battery recycling volumes, and the pace of imported crude lead arrivals at ports.