Lead Price Surge in March: Supply-Demand Tussle and Macro Boost[SMM Analysis]

Influenced by the improvement of market supply and demand and the positive macroeconomic environment, the price center of lead in March 2025 shifted significantly higher compared to February.

In early March, the news of the US tariff increase continued to ferment, and the rising market concern suppressed the trend of non-ferrous metal futures. After the Chinese “Two Sessions” proposed a series of pro-consumption policies, the macro-benefits and the coexistence of increased lead ingot supply and raw material supply contradictions led to a stalemate between long and short positions in the Shanghai lead market, with the price center hovering around 17,250 yuan per ton. In the spot market, the terminal consumption of lead-acid batteries remained largely unchanged, and major enterprises maintained relatively stable production with a weekly comprehensive operating rate of 70-80%. As the traditional off-season approached, dealers, especially those of electric bicycle batteries, were more cautious in purchasing, with most actively maintaining a low inventory level. Some production enterprises reported that new orders were becoming less active, and if battery inventory increased again, they would consider reducing production or shutting down in late March. Due to the sharp rise in the prices of metals such as antimony and tin, the production costs of lead-acid battery enterprises increased. Some enterprises intended to raise battery prices, but most were still in a wait-and-see mode due to the current weak terminal consumption.

In mid-March, data released by the US Department of Labor showed that the US February CPI inflation was lower than expected across the board, which eased some market concerns and provided more room for the Federal Reserve to cut interest rates. At the same time, overseas lead inventories continued to decline for three consecutive weeks, and the LME lead price rose. In the domestic Shanghai lead market, after the closure of the Chinese “Two Sessions,” the Party Committee of the People's Bank of China held an enlarged meeting and pointed out the implementation of a moderately loose monetary policy, with opportunities to lower the reserve requirement ratio and interest rates. Non-ferrous metals generally strengthened. Meanwhile, the lead market in March showed a dual increase in supply and demand, with no strong bearish factors emerging. During this period, the heavy pollution weather warning in the Beijing-Tianjin-Hebei region and surrounding areas was lifted, while Anhui was undergoing environmental inspections and new capacities of secondary lead in Jiangsu were put into production as scheduled, leading to a phased fluctuation in supply. Influenced by the macro-positive sentiment, domestic environmental production restrictions, and the rising prices of secondary lead raw materials, the Shanghai lead trend also showed a strong oscillation. During this period, the lead ingot import window was briefly opened.

The production of primary lead enterprises was stable with a slight increase, while the delivery of the Shanghai lead monthly contract reduced the short-term market circulating goods, and the spot market maintained a premium transaction. On the secondary lead side, with the rise in lead prices and the improvement of smelting enterprise profits, the mainstream ex-factory price of secondary refined lead increased slightly from a discount of 50 yuan per ton to 100 yuan per ton against the SMM No. 1 lead average price. In addition, the terminal consumption of lead-acid batteries was weak, enterprises maintained relatively stable production, and the rise in prices of raw materials such as lead, antimony, and tin increased the cost pressure on battery enterprises, with raw materials purchased only as needed.

In late March, the LME lead inventory reversed its downward trend, with a significant increase of 27,000 tons during the week of March 17-21, dragging the LME lead price down from its peak. In the domestic Shanghai lead market, after the delivery of the Shanghai lead 2503 contract, the lead ingot storage and delivery actions slowed down, and its impact on the lead price weakened. Meanwhile, imported lead arrived at ports and entered the spot circulation market, injecting a new supply source into the lead market. After the domestic lead price fell back on March 21, the supply contradiction in the scrap battery market intensified, and the smelting end profit shrank significantly, even turning from profit to loss, providing some cost support for the lead price. Due to the maintenance plan revealed by a large lead smelting enterprise in Henan, the lead price made up for the increase on March 24. In addition, some smelting enterprises in Hunan reduced production due to insufficient raw materials, and there was a water pollution environmental incident, with environmental inspections extending to Guangxi and Guangdong regions. However, no significant production impact has occurred so far. But market sentiment drove funds into the market, and the Shanghai lead main contract 2505 explored a high of 17,805 yuan per ton, refreshing the half-year high. After falling back, it oscillated strongly around 17,550 yuan per ton. During this period, the lead ingot import window was briefly opened.

On the consumption side, electric bicycle and automobile markets actively carried out “trade-in” activities, and the sales of some whole vehicles and matching batteries improved, easing the production enterprises' concerns about the off-season. Lead-acid battery enterprises maintained relatively stable production. After the lead price fell, some enterprises had actions of buying at low prices, but the overall purchasing intention was generally weak.

Recently, after the lead price made up for the increase and ran at a high level, the production cost of battery enterprises increased. Some enterprises, in order to reduce the unit consumption cost, kept the production lines running at full capacity during the production period, while also taking 1-2 days off within the month to balance the finished product inventory level. In addition, the current Shanghai-London ratio has expanded, which is not conducive to the export of lead-acid batteries. Export-oriented enterprises in regions such as Guangdong and Zhejiang reported poor orders, with production line operating rates mostly at 60-70%, and a few intended to shut down and take a holiday at the end of the month.

Looking forward to April, on the spot supply side, there is an expectation of a decline in the production of primary lead and secondary lead, especially with the maintenance of delivery brand enterprises and a reduction in lead ingot supply in the main production areas. Smelters may maintain a firm pricing state for shipments. The secondary lead market may experience a split situation. On the one hand, due to the high price of scrap batteries, cost factors will lead to smelters' firm pricing for shipments. On the other hand, some enterprises will accept imported crude lead, and this type of secondary lead can continue to be sold at a large discount. At the same time, the high price of scrap batteries, which are the raw materials for secondary lead, means that if the lead price trend weakens, the lead smelting profit will shrink, and the profit and loss level of secondary lead enterprises will approach the cost line. It is not ruled out that secondary lead enterprises may reduce production significantly. In addition, imported lead will continue to arrive at ports and flow into the domestic market, filling some of the raw material supply gaps, and secondary refined lead may show an expansion of regional price differences. On the consumption side, the replacement market for electric bicycle and automobile batteries in March and April is a traditional off-season, and major production enterprises will generally maintain a production state based on sales. Overall, the lead market will continue to revolve around supply changes and recycling costs in the short term.