High Finished Product Inventories at Secondary Lead Smelters Increase Willingness to Reduce or Halt Production? [SMM Survey]

According to a survey by SMM, the weekly operating rate of secondary lead smelters in four provinces from August 10 to August 16 was 43.84%, down 1.78 percentage points WoW. Some smelters in Anhui reported high finished product inventories and indicated a 30% production cut to alleviate inventory pressure. Additionally, some smelters mentioned that if downstream demand does not improve, they plan to halt production once raw material inventories are depleted, although the specific shutdown date is still uncertain. Last week, the operating rate in Anhui fell by 2.47 percentage points. In Henan, smelter production adjusted slightly with raw material arrivals, and the operating rate decreased by 2.22 percentage points. Smelters in Jiangsu and Inner Mongolia maintained relatively stable production, with little change in the operating rate last week.

Recently, lead prices have fluctuated significantly, making smelter production dynamics and downstream lead-acid battery consumption a focal point for the market. Before the peak season shows positive signs, downstream battery producers have low willingness to purchase lead ingots. It is expected that in the short term, finished product inventories at secondary lead smelters will remain high. If finished product inventories continue to accumulate, the willingness of secondary lead smelters to reduce or halt production will increase, potentially leading to a temporary decline in supply and driving lead prices to fluctuate upward.