Lead prices weaken, raw material costs stay firm, and smelter losses continue [SMM Secondary Refined Lead Weekly Review]

SMM, June 12 –

This week, SHFE lead fluctuated downward, and secondary refined lead premiums and discounts continuously changed with futures. At the start of the week, lead prices declined, with quotations ranging from a discount of 25 yuan/mt to a premium of 25 yuan/mt, and trading was sluggish. Mid-week, the market was under pressure, smelters held prices firm, and quotations rose to parity to a premium of 50 yuan/mt, forming an inversion with primary lead, with only sporadic just-in-time procurement. In the latter half of the week, futures slightly recovered, and quotations pulled back to parity to a premium of 25 yuan/mt. Downstream maintained just-in-time procurement as the primary approach throughout, and overall trading was weak.

This week, the SMM #1 lead ingot spot price continued to decline, while scrap battery raw material prices remained firm, further intensifying smelters' loss pressure. As of June 12, large smelters incurred a loss of 510 yuan/mt, and small and medium-sized smelters incurred a loss of 710 yuan/mt. Affected by price cuts at the recycling end, stores notably held back from selling, scrap battery circulating supplies tightened, and smelters' raw material inventory stayed low. Scrap battery purchase prices are expected to remain strong next week, smelting enterprises' profits will continue to be under pressure, and the loss trend is unlikely to reverse. Meanwhile, next week, smelters will see both production resumptions and production cuts/suspensions, resulting in a mix of bullish and bearish factors on the secondary refined lead supply side, and spot premiums are expected to stay at current levels.