Lead Prices Plunge as Downstream Enterprises Restock at Lows; Profitability of Secondary Lead Smelters Declines [SMM Weekly Lead Review]

SMM, December 27:

Orange alerts for heavy pollution weather in multiple regions have not yet been lifted, and secondary lead smelters affected by this have not fully resumed operations, resulting in limited finished product inventories at secondary lead smelters nationwide. However, due to the poor performance of the end-use consumer market, downstream enterprises showed moderate demand for lead ingot procurement. During the week, ex-factory quotations for refined lead were mainly at discounts of 50-0 yuan/mt against the SMM 1# lead average price, with some sources quoted at premiums of 25-50 yuan/mt, but transactions remained difficult. On Friday, lead prices plunged, prompting most battery producers to restock at lower prices, which slightly improved the trading atmosphere.

Following the sharp drop in lead prices, the latest procurement quotations for battery scrap were lowered. However, smelters' raw material inventories were mostly high-priced stocks from earlier periods, which had a greater impact on smelters subject to recent environmental protection-driven production restrictions, leading to the devaluation of raw material inventories. As of December 27, SMM data showed that the theoretical comprehensive profit and loss value for large-scale secondary lead enterprises was 410 yuan/mt, while that for small and medium-sized secondary lead enterprises was 207 yuan/mt.

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