Secondary Lead Production Slightly Increased in June, How Is July Expected?

1. June Secondary Refined Lead Production Brief Review

In June 2026, SMM secondary refined lead production rose slightly by 2.23% MoM, but dropped sharply by 31.2% from the 2026 peak of 282,000 mt in January. The industry’s production center shifted lower continuously in Q2. SMM’s weekly operating rate for secondary lead across four provinces hovered in the range of 28.4%–29.7% throughout the month, staying well below the normal reasonable range for a prolonged period.

Based on SMM spot data, the market downturn was triggered by a resonance of three negative factors from cost, supply, and demand. On the raw material side, the average price of scrap EV batteries stabilized at a high of 9,725 yuan/mt. Recyclers holding back from selling tightened supply circulation. Secondary lead and primary lead spot prices remained inverted. Smelters suffered per-mt losses of 500–700 yuan, with profitability under continuous pressure. The supply side saw clear divergence: large smelters in Anhui resumed production and ramped up, bringing incremental output, while a large east China smelter halted production for maintenance in mid-June and a northwest production resumption plan was postponed. The demand side entered the traditional off-season for lead-acid batteries. EV replacement and energy storage orders weakened. The comprehensive operating rate of SMM battery enterprises stayed low, spot transactions remained sluggish, and only rigid demand from long-term contracts supported purchasing.

2. July Secondary Refined Lead Production Outlook

(I) Supply Side Sees Repair Expectations, but Uncertainties Remain

After the pressure from semi-annual capital repatriation subsided, industry chain transactions returned to normal. The logic of marginal improvement on the supply side is clear. The large east China smelter that underwent maintenance in June is expected to fully resume operations and operate at full capacity in early July, adding about 10,000 mt monthly. The northwest smelter with postponed production resumption is waiting to see July price performance and will restart facilities simultaneously if lead prices stabilize. A small secondary lead smelter in Inner Mongolia also has a production resumption plan. Additionally, several smelters in east China indicated plans to cut production in July. Among them, large smelters in Jiangsu and Shandong have not yet finalized their July production plans; the enterprises said that if market conditions trend unfavorably, production resumption will be delayed or they will halt for maintenance. Overall, SMM expects July secondary refined lead production to increase by less than 10,000 mt MoM from June.

(II) Multiple Constraints Suppress Output Growth Space, Making a Significant Volume Increase Hard to Materialize

First, the tight supply pattern in scrap battery recycling is hard to reverse in the short term. Recyclers are stockpiling and holding back from selling, smelters’ raw material inventories are continuously drawn down, and arrivals will directly limit the speed of production resumption ramp-up. Second, the industry’s loss coverage has not narrowed significantly. Even if facilities have the conditions to resume production, enterprises have weak willingness to proactively raise output. If lead prices continue to weaken, additional production cuts cannot be ruled out. Third, the terminal off-season has yet to end. Downstream battery plants are producing based on sales, maintaining only rigid demand procurement under long-term contracts. Spot trading is sluggish, and weak demand will in turn suppress smelters’ production momentum. 3. SMM Lead Price and Supply-Demand Outlook: In the Doldrums, Bottom Supported by Costs

SMM expects prices to remain in the doldrums overall. On the cost side, high-priced scrap batteries provide rigid bottom support, but triple headwinds—macro rate hike expectations, high LME inventories, and the downstream off-season—continue to cap upside room, and the inversion between secondary and primary lead is unlikely to be corrected in the short term.

For the medium to long term, the market’s key focus is on three variables: first, whether the recovery and circulation of scrap batteries can improve, directly determining the elasticity of smelters’ raw material supply; second, the strength of order recovery from battery end-users, with the pace of stocking up in advance of the peak season affecting smelters’ motivation to raise production; third, the arrival volume of imported lead ingots, as continued inflows from outside China will persistently dilute the domestic supply increment from secondary lead. These three factors jointly determine the extent of secondary lead production recovery in July and the direction of lead price fluctuations.