SHANGHAI, Jun. 25 (SMM) – SMM data shows demand for replacement lead-acid batteries began slowing around the time of the Chinese Dragon Boat Festival. In addition, a growing number of scrap battery recyclers reduced operations due to the farming season in Anhui, Jiangsu, Hebei and Hubei province, which traditionally causes scrap battery traders to return home. However, secondary lead prices benefitted little from the current tight scrap battery supply. 

 

SMM reported earlier that some large secondary lead smelters lowered procurement prices by RMB 150-200/mt in late April in order to stem losses. These cuts lowered selling interest by scrap battery recyclers, which in turn forced smelters to cut production due to the lack of raw materials.

 

In late May and early June, however, smelters were forced to raise procurement prices by a total of RMB 100-200/mt in order to ensure raw materials necessary to meet production needs.

 

During the Chinese Dragon Boat Festival, LME lead prices fell from USD 2,260/mt to USD 2,100/mt, a drop of almost 5%. Secondary lead producers attempted to take the advantage of the opportunity to push down scrap battery prices, but no smelters were successful for two reasons. First, scrap battery supply was limited as high temperatures slowed replacements of batteries. Second, many scrap battery traders returned home for the sowing season in Anhui, Jiangsu, Hebei, and Hubei provinces, as well as due to thin profits for battery trades. In this context, cutting scrap battery prices only added to difficulties in purchasing scrap batteries. 

 

Tightening supply of scrap batteries did not help boost secondary lead prices, with the average price up only RMB 25/mt since late May. Although some small smelters cut output due to raw material shortages, secondary lead supply remained relatively ample, which SMM believes is due to sluggish demand downstream.