Secondary Refined Lead Maintains Large Discounts, Smelters Enter Loss-Making State with Gradual Decline in Operating Rates [SMM Survey]

According to an SMM survey, from August 17 to August 23, the weekly operating rate of secondary lead smelters in four provinces was 41.61%, down 2.23 percentage points WoW. The lead-acid battery consumption market remains sluggish, with most downstream battery producers showing insufficient willingness to take orders. Despite significant discounts on primary lead and secondary lead against the SMM 1# lead average price, transaction conditions remain unsatisfactory, and smelters face considerable pressure on finished product inventories. The number of smelters reducing or halting production in Anhui has increased, with a significant drop in production this week, leading to a 4.46 percentage point decline in the operating rate. In contrast, the production situation of secondary lead smelters in Henan, Jiangsu, and Inner Mongolia remains relatively stable, with little change in operating rates this week. The decline in operating rates at secondary lead smelters has reduced the demand for battery scrap; currently, the price of battery scrap is relatively stable, and smelters' raw material inventories are still adequate.

However, with lead prices continuing to weaken and poor downstream order-taking, the large discounts on secondary refined lead have pushed smelters into a loss-making state. We need to monitor whether secondary lead smelters will further increase the scale of production cuts or halts, and how the tightening supply will impact lead price trends.