Lead Prices Fell Then Rose During the Week, Secondary Lead Premiums Diverged [SMM Secondary Refined Lead Weekly Review]

SMM May 22 update:

SHFE lead fluctuated with initial weakness followed by strength this week, and secondary refined lead quotes continuously switched between premiums and discounts following futures fluctuations. At the beginning of the week, lead prices declined, but smelter quotes remained relatively firm, mainly hovering around parity to slight premiums, with very few market transactions. Mid-week, futures consolidated on the weak side, and smelters held prices firm for shipments, with quotes stable at parity to a premium of 50 yuan/mt, with only rigid demand making sporadic purchases. Later in the week, lead prices rebounded, smelter shipment sentiment diverged, and quotes gradually shifted to discounts of 0-50 yuan/mt, with some still retaining slight premiums. Downstream players mostly digested inventories after restocking on dips earlier, purchase willingness cooled, and overall spot transactions remained sluggish throughout the week.

SMM #1 lead ingot spot prices were initially weak then strengthened this week, but downstream battery plants maintained strong wait-and-see sentiment, spot transactions were poor, and smelter loss pressure further expanded. As of May 14, large enterprises posted losses of 290 yuan/mt, and small and medium-sized enterprises posted losses of 496 yuan/mt. As scrap battery raw material inventory pulled back WoW this week, smelter restocking expectations warmed up, and cost-side upward expectations strengthened. Smelting profits are expected to remain under pressure next week, with the loss pattern continuing. In addition, some smelters plan to resume production next week, secondary refined lead supply is set to increase, and spot premiums are expected to converge.