According to China Nonferrous Metals News, since mid-November, lead ingot supply has gradually recovered while elevated prices have curbed downstream procurement, causing lead prices to retreat from their highs. Subsequently, with increased smelter maintenance and sustained inventory drawdowns, the fundamentals for Shanghai lead futures have improved, leading to a stabilization in lead prices.

Lead Concentrate Supply Remains Tight

Since the beginning of this year, the lead concentrate market has remained in a state of tight supply, with processing fees falling to absolute lows. Since the fourth quarter, domestic smelters have initiated winter stockpiling ahead of schedule. Although losses on lead concentrate imports have narrowed, the import window has not fully opened. Spot cargoes in the imported ore trade market remain scarce, long-term contract negotiations are progressing slowly, and smelters overall maintain a cautious wait-and-see attitude.

Regarding domestic ore, driven by rising silver prices, some smelters reported that spot lead concentrate resources are nearly depleted in the market. Market quotations are sparse, and processing fees remain at low levels. However, with the arrival of earlier imported long-term contracts, the raw material demand gap for some smelters has eased, and they have suspended lead concentrate procurement plans. This has led to a dual decline in both supply and demand in the spot lead concentrate market. In December, as smelters completed their winter stockpiling ahead of schedule, processing fees in northern regions have gradually stabilized after declining. However, smelters in areas like Yunnan and Hunan continue to procure raw materials by suppressing processing fees. Additionally, lead-zinc mining projects in Xinjiang, Tibet, and Inner Mongolia entered their winter production reduction and maintenance phase in mid-to-late November. Supply from the mining end will remain tight, leaving little room for processing fees to rise in the short term.

Improved Selling Sentiment Among Suppliers

On one hand, numerous domestic recycled lead smelters have transitioned to a multi-feedstock production model utilizing “lead concentrate + scrap batteries.” SMM survey data indicates that after completing this transformation, such smelters' reliance on scrap batteries as feedstock has dropped from 95% to 20%. Waste battery holders, concerned that weakening demand could trigger price declines, have resumed normal inventory turnover. Meanwhile, recent sustained lead price declines prompted smelters to simultaneously lower their waste battery purchase offers, prompting holders to offload inventory en masse due to fear of further drops. Under these dual pressures, waste battery prices have followed lead prices lower, weakening cost-side support. Nevertheless, smelters maintain robust overall production levels, sustaining strong demand for scrap batteries. Even with increased seller willingness, marketable supply remains relatively tight.

For primary lead, despite processing fees falling to absolute lows, sustained increases in byproduct prices like sulfuric acid and silver keep smelter profits generally healthy. Recently, primary lead supply has seen a slight decline as some medium-to-large smelters entered routine maintenance. For recycled lead, operating rates at recycling plants have rebounded to around 50% as raw material arrivals improved. Previously, a smelter in Anhui suspended production due to the renewal of its hazardous waste permit, leading to a temporary drop in overall industry operating rates. Going forward, provided raw material arrivals remain stable and no unexpected environmental controls or other disruptions occur, the operating rate of recycled lead smelters is expected to maintain steady operations.

Downstream Restocking at Lower Prices

From the terminal market perspective, the electric bicycle battery market is gradually cooling, with distributors adopting a more cautious purchasing stance and overall production enthusiasm remaining low. Meanwhile, the automotive battery market has entered its peak replacement season. Large and medium-sized enterprises have initiated their customary year-end inventory replenishment, leading to a recovery in production capacity utilization rates among manufacturers. Analyzing transaction activity, both primary and recycled lead sectors have seen additional production halts, resulting in persistently tight market supply for spot goods. Although recycled lead smelters' capacity utilization has significantly recovered, enterprises primarily focus on fulfilling prior long-term contracts, leaving limited spot resources available. Consequently, finished product inventories struggle to accumulate effectively. Some enterprises have suspended shipments of refined recycled lead or are selling at premiums, prompting downstream buyers to shift toward primary lead procurement. Recently, as lead prices fluctuated downward, downstream purchasing activity has shown signs of recovery, with lead ingot inventories trending downward.

Looking ahead, primary lead smelters are entering maintenance and production cut phases, with delivery-grade output declining and supply tightening regionally. In the recycled lead sector, cost support has eased somewhat, but operating rates are expected to remain stable provided raw material arrivals stay steady and no unexpected environmental controls arise. On the demand side, as lead prices stabilize, market caution eases, and essential restocking increases, short-term lead prices have gained some support. Furthermore, considering that tight raw material supply is unlikely to see substantial improvement, constraining smelter operations, the downside potential for lead prices remains relatively limited.

As an integrated internet platform providing benchmark prices, on December 10th, the benchmark price for lead, according to SunSirs, was 17190.00 RMB/ton, an increase of 0.79% compared to the beginning of the month (17055.00RMB/ton).

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