Increased production cuts in the recycling sector and firm scrap battery prices provide support for lead prices [Institutional Commentary]

Last Friday in the domestic spot market, downstream purchasing enthusiasm was moderate, and lead ingot suppliers expanded discounts for shipments. As of last Thursday, the domestic social inventory continued to slightly decrease by 3,700 mt to 62,900 mt compared to Monday. In terms of supply, scrap battery inventories at some smelters fell below the safety line, scrap battery prices continued to hold up well, secondary lead smelters generally incurred losses again, and the willingness to cut production increased. The lack of supply elasticity provided long-term support for lead prices. On the demand side, after the Qingming Festival, the operating rate of lead-acid battery companies resumed and increased, but due to the downstream off-season, the operating rate pulled back again last week, and the battery sales promotion atmosphere was strong. In addition, the lead ingot import window opened in early April, and external macro risk uncertainties have not been fully digested, which may still suppress domestic market prices in the short term. Therefore, it is recommended to continue to wait and see in the short term, and wait for low-buy opportunities in the medium term.