Battery Scrap Prices Remain Firm: Robust Demand from Secondary Lead Smelters; Tight Raw Material Inventories May Threaten Production? [SMM Analysis]

Recently, battery scrap prices have remained firm, with the tax-inclusive price of e-bike lead-acid battery scrap reaching around 10,150 yuan/mt and the highest national price even reaching 10,380 yuan/mt in Jiangsu. Currently, lead prices are still fluctuating at high levels. Stores are well aware that during the off-season for recycling and the pre-holiday stockpiling period, battery scrap prices are more likely to rise than fall, leading to a strong sentiment of holding back cargoes. While recyclers find it difficult to pick up goods, they also exhibit a sentiment of holding back sales, exacerbating the raw material supply issues for secondary lead smelters.

Moreover, despite the firm raw material prices, secondary lead smelters still have some profit margins. The essential demand for production and the willingness to increase production have prompted them to raise their raw material procurement prices. This cycle is expected to continue until raw material prices rise to the point of completely eroding the smelters' profits. At that time, secondary lead smelting enterprises will enter a loss-making state due to high raw material prices and low finished product selling prices, leading to a sharp decline in production enthusiasm. As their procurement demand for scrap decreases, battery scrap prices may stabilize.

Some secondary lead smelting enterprises have expressed that they are hoping for a slight drop in lead prices. This would cause battery scrap suppliers to worry that falling lead prices might drag down battery scrap prices, leading to a sentiment of offloading their stock, thereby easing the tight raw material inventories.

According to SMM data, the current days of raw material inventories at smelters are around 13 days, which is close to the historical dynamic average. Based on the production schedule expectations for December, the demand for battery scrap procurement is still rising. If the raw material supply remains tight, the raw material inventories at smelters will fall below the average level, potentially limiting the growth in secondary lead production.