Lead Prices Retreated from Highs, Smelter Raw Material Costs Remained Elevated, and Losses Intensified This Week [SMM Secondary Refined Lead Weekly Review]

SMM May 29 update:

Lead prices fluctuated this week, and secondary refined lead premiums changed repeatedly along with market movements. At the beginning of the week, smelter losses eased and shipments increased, with quotations at discounts of 50-0 yuan/mt. Mid-week, lead prices fluctuated, and smelter mainstream quotations were at slight discounts, with only localized minor premiums, while downstream trading activity weakened. Approaching the weekend, spot lead prices fell, and some smelters held back from selling and held prices firm. Mainstream quotation range was from a discount of 50 to a premium of 75 yuan/mt. Downstream wait-and-see sentiment was strong, and overall transactions throughout the week were lackluster.

This week, SMM #1 lead ingot spot prices fluctuated at highs before pulling back. However, affected by a WoW decline in raw material inventory, smelters generally held prices firm when purchasing, raw material costs stayed high, and industry losses further widened. As of May 28, large enterprises posted losses of 334 yuan/mt, and small and medium-sized enterprises posted losses of 542 yuan/mt. Looking ahead to next week, production resumption expectations at secondary lead smelters are heating up, early raw material stockpiling demand is expected to increase, procurement prices are expected to hold up well, profits are expected to remain under pressure, and industry losses are unlikely to improve. This week, finished product inventories at some secondary lead enterprises saw a slight inventory buildup. Combined with incremental output from some smelters resuming production next week, market supply is set to increase, and spot premium expectations are expected to narrow somewhat.