Weekly Finished Product Inventories at Secondary Lead Smelters Hit Record Low; Is There a Possibility of a Rebound in Lead Prices? [SMM Analysis]

Yesterday marked the delivery of the SHFE lead 2412 contract. The combined pressure of lead ingot social inventory and mediocre downstream consumption has caused lead prices to fluctuate downward. Consequently, the price increase of raw material battery scrap for secondary lead has slowed, with some smelting enterprises even lowering their purchase prices.

Due to the limited scrappage of batteries and the strong sentiment of suppliers holding back cargoes, raw material arrivals at smelters have been unsatisfactory. Additionally, in early December, relatively favorable profits in secondary lead prompted smelters to ramp up production and resume operations, significantly depleting raw material inventories. Currently, SMM data shows that the days of raw material inventories at secondary lead smelting enterprises have fallen below the dynamic average level.

Given the tight supply of raw materials, many secondary lead smelters experienced a decline in production last week. Coupled with weaker lead prices, downstream battery enterprises showed improved restocking and purchasing enthusiasm at lower prices. Finished product inventories at enterprises also declined significantly, with weekly secondary lead inventory hitting a record low.

Last week, the operating rate of primary lead and in-plant inventories at major delivery brands also declined, while the operating rate of downstream lead-acid battery enterprises saw a slight increase.

As the New Year holiday approaches, there is still an expectation of pre-holiday stockpiling by downstream enterprises. In the near term, we need to monitor changes in social lead ingot inventories. If downstream lead-acid battery operating rates continue to rise and social inventories do not show significant accumulation, lead prices may rebound and make up for previous declines.