SHANGHAI, Jul 24 (SMM) – Secondary refined lead’s price spread with primary materials narrowed from a week ago as profits shrank in the falling market and as battery scrap prices remained firm.

Most offers for secondary refined lead over the past week were heard at discounts of 200-300 yuan/mt ex-factory against the SMM #1 primary lead price. Some were even at discounts of 100 yuan/mt, SMM learned.

This compared to discounts of 400-500 yuan/mt earlier this month.

Lead prices have weakened since the start of July and prices of secondary refined lead also fell. However, battery scrap prices remained firm due to limited supply. This led to a sharp drop in profits for secondary lead smelters, and a narrowing price spread to primary lead as a result.  

In fact, SMM learned that some small-sized smelters have cut their production by half or temporarily suspended their operations given the thin margins.

SMM expects the spread between secondary and primary lead to shrink further as operating rates at secondary lead smelters are set to fall if lead prices extend their decline.