Impact of Pre-Holiday Stockpiling by Downstream Battery Plants on Production Dynamics of Secondary Lead Smelters [SMM Analysis]

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SMM, January 10:

The impact of the Chinese New Year holiday on the lead market is gradually increasing. Battery scrap recyclers reported that some stores have already stopped selling used batteries. Meanwhile, secondary lead smelters are in the raw material stockpiling phase. However, current inventories remain ample. Data shows that this week's days of raw material inventories exceed the historical average by approximately five days, so the supply-demand imbalance has not become significantly pronounced.

It is worth noting that many small and medium-sized downstream battery producers have shown insufficient willingness to purchase recently, stating that their pre-holiday lead ingot stockpiling is essentially complete and they are expected to start the holiday 3-5 days earlier. Additionally, the anticipated inventory buildup of lead ingots after the Chinese New Year holiday may weigh on lead prices. Some downstream enterprises expressed concerns about potential price declines, leading them to avoid excessive pre-holiday lead ingot purchases. A few downstream battery producers also noted that stockpiling new batteries is more favorable than stockpiling lead ingots. Currently, their new battery inventories are sufficient for sales through March, and they are making just-in-time procurement of lead ingots. Their holiday schedule is expected to be slightly later than other enterprises. From the current lead ingot transaction situation, lead prices face upward pressure.

For secondary lead smelters, although battery scrap purchase prices have been reduced, arrivals remain a significant concern. According to SMM, while secondary lead smelters' raw material inventories are currently moderate, if arrivals remain tight next week, enterprises may be forced to raise purchase prices or opt for production halts and maintenance during the holiday. Under the current sideways movement of lead prices, given the extent of the decline in battery scrap prices, some smelters are already operating at a loss. Consequently, the number of secondary lead smelters halting production for maintenance during this Chinese New Year holiday may significantly increase compared to previous years.