Increase in Maintenance of Secondary Lead Smelters in December?  [SMM Analysis]

As winter sets in and temperatures drop, the consumption of two-wheeled electric bicycles enters the off-season, leading to a decline in the scrappage of lead-acid batteries. Additionally, in northern regions, frequent occurrences of smog, heavy snow, and frost, along with subsequent environmental protection-related controls, vehicle transportation issues, and difficulties in battery scrap collection, may significantly impact the production of secondary lead in major production areas (Anhui, Hebei, Inner Mongolia, etc.). Coupled with the recent new maintenance plans of primary lead smelters, the spot market has seen a temporary tightening of spot circulating supply.

SMM preliminary survey on the production expectations of secondary lead smelters in December is as follows:

As shown in the chart, many enterprises have routine year-end maintenance plans, and some enterprises expect a decline in production due to external factors. Due to the surge in lead prices overnight, today's spot quotations have been significantly raised, while the price increase of battery scrap has been limited, resulting in considerable profits for secondary lead smelting enterprises. Therefore, some enterprises in the table have indicated a delay in maintenance.

Additionally, it is noteworthy that a large smelter in Jiangxi has recently resumed production, with normal battery scrap dismantling but no lead output yet due to equipment issues. Stable production is expected in December. A large smelter in Shandong has resumed battery scrap procurement and plans to start to dry furnaces for stable lead output in early December. A large secondary lead smelter in Ningxia, which has been shut down for several months due to internal factors, recently indicated the possibility of resuming production.

Consumption side performance: Currently, the consumption of two-wheeled electric bicycles has entered the off-season, while the consumption of automobiles and some three-wheeled electric vehicles remains moderate. It is not ruled out that some electric bicycle lead-acid battery producers may have production reduction plans in December, but the actual impact remains to be seen.

Despite the current weak supply and demand in the spot market, the improved profitability has increased the production enthusiasm of secondary lead enterprises, reducing their willingness to undergo maintenance. The fundamentals may potentially reverse after entering December.