Lead Price Rebound Ignites Local Production Resumptions, Loss Shackles Still Suppress August Secondary Lead Supply

SMM production schedule data show that in July, the total MoM impact on refined lead from Chinese secondary lead enterprises was -16,800 mt.

Most smelters proactively cut production due to the dual pressures of market losses and raw material shortages, pulling the industry's monthly operating rate down to 29.81%, significantly below the same period in previous years. August production schedules were further under pressure, with the MoM impact on refined lead reaching -22,300 mt. Most enterprises had held a pessimistic view on the market outlook earlier, making maintenance and low-load operations the norm. Many smelters postponed their originally planned production resumptions for August to September.

Recently, the futures market saw a phased rebound, with secondary refined lead prices rising in tandem, narrowing the loss range for smelters somewhat. On the profitability side, although still in the red, marginal improvements led to a divergence in production sentiment: some smelters in east China, seeing profit recovery, developed intentions to ramp up production; others in north China broke their original plans and opted for early production resumption with smaller furnaces. However, the industry as a whole remained mired in negative returns, with small and medium-sized plants still showing relatively large losses, and there has yet to be a widespread wave of work resumption.

Raw material side, scrap EV battery prices pulled back to 9,175 yuan/mt, easing raw material cost pressure. However, scrap battery recycled supply did not significantly increase, still constraining overall output. Looking at production schedule details, east China, a major secondary lead production area, showed significant divergence: only a few enterprises plan to ramp up production, while most smelters remained shut down or operating at low loads. Most furnace resumptions in central and north China were still concentrated from late August to September, limiting overall growth in August, with enterprise production highly anchored to lead prices and raw material arrivals.

Demand side, the lead-acid battery industry remained in its traditional off-season, with downstream purchasing generally cautious, providing limited boost to lead prices. This round of lead price rebound was driven more by supply contraction in the primary lead sector and the closing of speculative short positions as delivery approached, with end-use consumption not recovering synchronously. Overall, secondary lead supply in August maintained low levels. Loss narrowing led to localized production ramp-ups and early resumptions, but this has yet to constitute a full supply recovery. Whether output can substantially rebound in the future still depends on the sustainability of the lead price rebound, an increase in scrap battery recycling supply, and a recovery in downstream battery demand, with the realization of production resumptions in September remaining uncertain.