Some spot orders of refined lead saw narrowed discounts, while robust raw material costs warrant caution against declining smelting profits [SMM Secondary Refined Lead Weekly Review]

SMM December 12:

Lead prices fluctuated downward this week. Spot orders for secondary refined lead were limited, and suppliers showed low enthusiasm for selling. Ex-factory prices including tax for spot orders during the week were reported at discounts to premiums of 50 yuan/mt against the SMM #1 lead average price. Low-priced supplies in Central China saw their discount narrow to 75 yuan/mt from 125 yuan/mt last week. Downstream lead-acid battery producers maintained a strong wait-and-see sentiment, mostly conducting restocking based on rigid demand. Some enterprises indicated ample lead ingot raw material inventory and were in no rush to purchase spot orders. SMM expects little change in premiums and discounts next week, with attention on the production enthusiasm of secondary lead smelters.

Supply of waste lead-acid batteries gradually tightened, and raw material costs for secondary lead smelters showed signs of increasing. Combined with the downward fluctuation in lead prices this week, smelting profits for secondary lead enterprises declined. As of December 12, 2025, the theoretical comprehensive profit/loss for large-scale secondary lead enterprises was 175 yuan/mt, while for small and medium-sized enterprises it was -35 yuan/mt (by-product revenue in the model excludes tin and antimony). Approaching the delivery date for the SHFE lead 2512 contract, caution is warranted as lead price trends may be impacted by the manifestation of social inventory. With raw material costs remaining firm, secondary lead profits face the possibility of further decline.

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