2024 Secondary Lead Market Nears Conclusion: Unveiling the Behind-the-Scenes Dynamics of the 2025 Long-Term Contract Signing [SMM Analysis]

As 2024 is coming to an end, the delivery of 2025 long-term contracts will begin in two weeks. So, what is the current status of the annual long-term contracts for secondary lead? SMM has compiled the following information based on statements from some smelters, traders, and battery plants.

As the suppler of goods, secondary lead smelters are relatively proactive in the pricing and proportion allocation of long-term contracts. Prices generally refer to the long-term transaction prices of primary lead in Henan, with adjustments based on their own historical transaction prices.

Currently, it is known that the annual long-term transaction prices of primary lead in Henan for downstream top-tier battery plants are at a discount of about 30 yuan/mt against the SMM 1# lead average price, while the quotes for traders are at a premium of 0-30 yuan/mt against the SMM 1# lead average price, with some traders reporting cases of a premium of 50 yuan/mt.

In Anhui, secondary lead enterprises are quoting discounts of 130-150 yuan/mt for downstream battery plants and discounts of 100-130 yuan/mt for traders. Downstream enterprises have a low acceptance of these discounts and are still in negotiations.

Traders have indicated that a discount of 150 yuan/mt for secondary refined lead against the SMM 1# lead average price is acceptable, while a discount of ≤100 yuan/mt is difficult to accept.

In recent years, lead prices have increasingly deviated from fundamentals due to financial influences, and the price increase of waste lead-acid batteries has been difficult to control due to a significant supply-demand imbalance. Secondary lead smelters generally indicate that a high proportion of annual long-term contracts makes their operations more passive and exposes them to greater risks. Although the proportion of long-term contracts has been reduced in 2024, there is still a willingness to further reduce the proportion in 2025. One secondary lead smelter stated that the proportion of long-term contracts in 2024 is 70%-80%, and it would be ideal to reduce it to 50% in 2025. Another secondary lead smelting enterprise expressed a desire to set the proportion at around 20%-30% in 2025.

From the perspective of traders, it is expected to be difficult to sign 2025 long-term contracts at suitable prices and quantities, whether based on the quotes or proportions provided by secondary lead smelters. Downstream top-tier enterprises are still advancing the progress of long-term contract signing, while other downstream battery producers are adopting a wait-and-see attitude, waiting for reference transaction prices. Secondary lead smelters are also adopting a wait-and-see attitude, waiting for the annual long-term transaction prices of primary lead and the quotes from other nearby secondary lead smelters. As the new round of long-term contract delivery approaches, the market expects that the 2025 long-term contracts will generally be finalised next week. Please continue to follow SMM for further updates.