At the end of Q3, lead prices ended their downward trend, with SMM# lead stabilizing at the 16,000 yuan/mt level. Entering October, lead prices rebounded slightly due to a boost in the macro atmosphere, but actual downstream consumption was slow to materialize. The inventory buildup at smelters during the National Day holiday gradually shifted to social warehouses. As the macro bullish sentiment faded and the pressure of refined lead inventory buildup increased, lead prices fluctuated downward again.
In China’s domestic spot market, a series of monetary policies and consumption stimulus policies around the National Day holiday led to a general rise in non-ferrous metals, with SHFE lead increasing in this atmosphere. An SMM survey revealed that downstream lead-acid battery enterprises had mixed expectations for Q4 consumption. Due to lower-than-expected pre-sale transactions of primary and secondary refined lead smelter inventories during the October National Day holiday, the hidden inventory at smelters gradually shifted to social warehouses and became reported inventory by mid-October.
In the week following the National Day holiday, downstream raw material inventory levels were relatively high, with only a small amount of just-in-time purchasing at low prices. As lead prices rose, there were many instances of holders expanding discounts to sell off accumulated inventory. This week marked the second week after the National Day holiday and was close to delivery, with smelter holiday inventories either depleted or transferred to social warehouses. In terms of market quotations, with smelter inventories declining and lead prices weakening, many turned to premium quotations or were reluctant to sell, observing the market. By mid-October, the circulation of lead ingots was still not abundant, and almost no selling was observed in the market. Looking ahead to Q4, the overall macro atmosphere was expected to remain warm, with the lead ingot import window still closed. Additionally, the supply issues of lead concentrate and battery scrap throughout the year had not been fully resolved, providing good support for lead prices. In late October, although refined lead supply was expected to recover, downstream consumption, especially for automotive start-stop batteries, was still anticipated. The lead market fundamentals might enter a phase of dual growth in supply and demand, with continued attention needed on the recovery progress of smelter production and changes in domestic social inventory.
