Regulatory Pressure and Rising Costs: A Weekly Decline in Secondary Lead Smelting Operations [SMM Analysis]

Last week, we discussed the tug-of-war between secondary lead smelters operating at high capacity and scrap collectors holding back their sales due to rising prices. This week, the smelters have seen a decline in their operational rates due to environmental regulations and tight raw material supply.

However, as the scrap lead-acid battery market is in its off-season, collectors also have limited stock, meaning that the price of scrap batteries will not drop in the short term just because the smelters' operational rates have decreased. Additionally, due to positive macroeconomic sentiment and expectations of maintenance shutdowns at domestic primary lead smelters, lead prices have remained high and volatile. Even with high scrap battery prices, secondary lead smelters still make a profit and maintain their production enthusiasm.

The high demand from secondary lead smelters for scrap batteries makes their prices prone to rise and reluctant to fall.

What requires vigilance is that recently, lead-acid battery companies, cautious due to high lead prices, are reluctant to buy. Secondary lead companies, in order to sell their products, are increasing discounts, which could continuously compress their profits in a situation of high costs and low revenue. Entering April, if the consumption of terminal lead-acid batteries continues to perform poorly, secondary lead smelters may face large-scale production cuts under the pressure of high costs and low profits.