SMM Analysis: Performance of Secondary Lead Spot Market Amid High Lead Price Fluctuations

Recently, lead prices have fluctuated at high levels, with the SMM 1# lead average price stabilizing above 17,000 yuan/mt.

Although battery scrap prices have gradually followed the upward trend, the profit margins for secondary lead remain optimistic, leading to high production enthusiasm among smelting enterprises.

In Anhui, secondary lead smelters experienced slight production cuts due to environmental protection-related controls a few weeks ago but have now mostly returned to normal, with some enterprises even significantly increasing production. Large smelters in Jiangxi and Shandong have also resumed production. Due to robust demand for raw materials and the off-season for battery scrappage, the quantity of purchases by recyclers is limited. Smelters have raised their procurement prices to replenish raw material inventory promptly. Currently, the mainstream delivery-to-factory price for tax-inclusive e-bike lead-acid battery scrap has exceeded 10,000 yuan/mt, but the raw material inventory levels of enterprises are still rapidly declining. Some enterprises have indicated that they may be forced to cut production after a rapid short-term increase due to raw material constraints.

As the raw material imbalance has not yet reached a critical stage, the price increase of battery scrap remains controllable. Especially since lead prices have not shown a significant decline, most secondary lead suppliers are actively selling, with some even willing to pre-sell. The ex-factory prices for refined lead have shifted from a small premium to a large discount. Yesterday, high-bismuth lead sources in Anhui were at a discount of 150 yuan/mt to the SMM 1# lead average price ex-factory.

SMM believes that entering next week, the supply-demand imbalance for battery scrap may escalate compared to this week, and the increase in secondary refined lead spot supply will gradually become evident. As the delivery period approaches, social inventory is expected to rise. Overall, the increase in supply may slightly drag down lead prices, while the rising battery scrap prices squeeze the profits of secondary lead smelters. The ex-factory discount for refined lead from suppliers may narrow.