Green Constraints and Cost Pressure: Weekly Decline in Operating Rate of Secondary Lead Industry [SMM Analysis]

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SMM, March 14:

Last week, we mentioned the tug-of-war between secondary lead smelters with high operating rates and bullish yet reluctant-to-sell recyclers. This week, due to factors such as environmental protection-related controls and tight raw material supply, smelter operating rates have ultimately declined.

However, as the waste lead-acid battery market is in an off-season for scrapping, recyclers have limited stock on hand, and in the short term, scrap battery prices are unlikely to follow the decline in smelter operating rates.

Additionally, supported by favorable macro sentiment and the expected maintenance of major domestic primary lead producers, lead prices have hovered at highs. Even with elevated scrap battery prices, secondary lead smelters remain profitable and maintain production enthusiasm.

Raw material inventories at secondary lead smelters are below the average level, and the high demand for scrap batteries makes their prices more likely to rise than fall.

It is worth noting that lead-acid battery companies have shown cautious purchase willingness due to high lead prices. To boost sales, secondary lead companies have expanded discounts, and the high-cost, low-revenue scenario may continue to compress their profits.

After entering April, if end-user demand for lead-acid batteries remains weak, secondary lead smelters may face widespread production cuts under the pressure of high costs and low profits.