Details of the February-March Secondary Lead Production Plan: Closely Monitoring the Impact of Raw Material Supply on Smelter Production Growth [SMM Analysis]

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SMM, February 28:

With the conclusion of the Chinese New Year holiday, production resumption plans at China's secondary lead smelters are becoming clearer, signaling new changes in the supply-demand pattern of the market. According to the latest data, smelters in multiple regions have arranged detailed timetables for production resumption, with production expected to gradually recover in March.

In east China, smelters in Jiangsu and Zhejiang have shown positive performance. Jiangsu J enterprise, which suspended production at the end of December, resumed production in February, resulting in an increase of nearly 10,000 mt in production. Zhejiang H enterprise, which halted production for maintenance at the end of January, plans to resume production in March. Additionally, several smelters in Anhui, such as B, C, and D enterprises, are expected to increase production in March, which is anticipated to bring a significant supply increase to the market.

In central China, production resumption plans are also concentrated. Henan K enterprise and Guangxi L enterprise reduced production during the Chinese New Year and are gradually resuming production after the holiday. Hunan S enterprise and T enterprise suspended production for the holiday, with S enterprise already resuming production and T enterprise expected to restart in March. This will further increase market supply.

Overall, with the accelerated progress of production resumption at secondary lead enterprises, market supply is expected to increase significantly. However, enterprises need to closely monitor changes in raw material supply and downstream demand during the resumption process, and plan production and inventory reasonably to cope with market fluctuations.

As March marks the traditional consumption off-season for lead-acid batteries, the supply of scrap batteries may decrease. Amid the wave of concentrated production resumption at smelters, caution is advised regarding the sentiment of recyclers hoarding materials in anticipation of price increases, which could lead to excessive raw material price hikes.

Based on SMM's experience, although enterprises are confident in their production plans for March, raw material pressure will be the main factor limiting production growth. Additionally, downstream consumption and the profitability of secondary lead enterprises are also key factors affecting production growth. Market participants should closely monitor the production resumption progress of smelters to better grasp market dynamics.