SHANGHAI, Oct 16 (SMM)—The 10th Secondary Lead-acid Battery Industry Summit 2020—held by SMM—took place today, at which SMM senior Pb analyst Xia Wenming gave a speech on the theme of “How China lead market will fare in H2 2020 on the backdrop of oversupply”
Lead prices rose to a new yearly high in the third quarter thanks to a traditional high season, but later cruised lower as domestic secondary lead supply expanded further and LME lead stocks returned above 100,000 mt on the backdrop of rising COVID-19 cases globally, Xia said.
As new capacities have gradually come online in Q2 and Q3, monthly secondary lead output rose sharply since July. Total output in the first nine months of 2020 were 12% higher than the same period last year. However, the amount of battery scrap is estimated to stand at 4.8 million-5 million mt, increasing at a slower pace than last year. Tight supply of battery scrap will slow release of secondary lead capacities.
Operating rates at large-scale lead-acid battery producers cruised higher in Q2 and Q3, and are expected to hold stable in Q4, while that at small and medium-scale producers are likely to fall.
China exported 105 million lead-acid batteries in the first eight months of 2020, down 5.6% from the same period last year.
China lead market in H2 2020
More than 600,000 mt of new secondary lead capacity are estimated to come online in 2020.
The implementation of the new solid waste law in September limited transport of battery scrap, driving lead smelters to increase use of lead concentrate, which led to an early decline in its treatment charges.
Supply of lead concentrate is likely to tighten further in winter due to smaller imports and suspension at mines in high-altitude areas. Imports of lead concentrate stood at 807,000 mt in January-August, down 25.4% from the same period last year.
Lead prices are expected to trend lower in Q4. LME lead is likely to move between $1,720-1,900/mt, while SHFE lead between 13,800-15,600 yuan/mt.
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