At present, May is close to more than half, after the return of the May Day holiday, the lead price still does not change its previous rising trend, in recent trading days is a new high in the stage of refreshing, on May 14, the Shanghai lead main intraday once rushed to a high of 18,445 yuan / ton, refreshing a new high since December 2018.
SMM believes that the rise is mainly due to the intensification of contradictions on the raw material side after May Day, especially the implementation of the "reverse invoicing" policy for waste batteries, the reduction of short-term recycling volume and the rise in tax costs. At the same time, the shortage of lead concentrate and waste batteries at the raw material end has boosted lead prices, which is also the main driving force for lead prices to continue to break through new highs. And in terms of consumption, with the recent rise in lead prices, the production cost of batteries has risen, such as electric bicycle battery companies have successively released price increase news, consumer prices have begun to appear normal transmission, and the follow-up may be expected to boost the orders of battery companies.
Therefore, SMM believes that there are two factors that need to be paid attention to in the future: on the one hand, the degree of positive price transmission (raw material - ingot end - lead-acid battery); On the other hand, as the delivery date approaches, it is also necessary to pay attention to the pressure brought by the accumulation of this round of delivery.
As for the overall supply side situation in May, SMM expects that in terms of primary lead, with the increase in the maintenance of primary lead smelters, and the tightening of the supply of raw materials such as lead concentrate, it is expected that the output of electrolytic lead will continue to decline in May, and the output of electrolytic lead in May is expected to decline slightly to 287,000 tons; SMM expects the output of recycled refined lead to decline by 31,400 tons to 295,600 tons in May.
However, it should be noted that due to the continued high price of lead, the profits of recycled lead enterprises have risen, and if the supply of waste batteries has improved in the future, the lead market may face a slight pressure on the accumulation of stocks in May. In addition, as the import loss continues to narrow, it is also necessary to pay attention to the performance of imports near June, if the follow-up import window opens, or the formation of negative factors for lead prices. However, in the short term, SMM expects that lead prices may still show a strong operating trend, and if the follow-up is imported cash, it is necessary to be vigilant against the risk of rising and falling.
April Lead Market Review
Looking back on April, the performance of lead prices is not outstanding, although in the first half of the month the lead market smelters recovered from the overhaul, resulting in a large pressure on the short-term lead ingot inventory, but then, in the ingot end of the production reduction superimposed on the pull of funds, Shanghai lead successfully stood on April 19 on the 10,000 seven mark, close to the May Day holiday, the lead market is in the primary lead and recycled lead refinery intensive maintenance, especially the delivery of brand supply reduction superimposed lead concentrate and waste battery supply and other reasons to maintain a strong operation. And on April 22, it once rushed to 17,560 yuan/ton, a new high since September 2019. As of April 30, Shanghai lead closed at 17,350 yuan/ton, up 3.18% monthly, recording the second consecutive monthly rise.
As of April 30, the average spot price of SMM 1# lead ingot was reported at 16,900 yuan/ton, an increase of 475 yuan/ton or 2.89% compared with 16,425 yuan/ton on March 29.
Fundamental review
In terms of primary lead:
In terms of primary lead, in terms of operating rate, according to SMM research, the operating rate of SMM primary lead enterprises in April was about 67.27%, a slight decrease of 0.72 percentage points from March. In terms of output, according to SMM data, the national electrolytic lead output in April 2024 was 291,500 tons, down 0.74% month-on-month and 7.41% year-on-year. According to the survey, in April, the maintenance and recovery of electrolytic lead smelting enterprises were parallel, and the overall output showed a slight downward trend. Mainly in Henan, Hunan, Yunnan and other regions, large and medium-sized enterprises have maintenance, and more delivery brand enterprises, bringing nearly 20,000 tons of reduction. However, in April, smelters in Hunan and Yunnan resumed production after overhaul, and at the same time, in April, lead prices showed a fluctuating upward trend, and the price of by-product silver brushed a record high, and the production enthusiasm of smelting enterprises improved, driving the increase in primary lead production. Therefore, on the whole, the production of electrolytic lead enterprises in April roughly offset the increase and decrease, and the output did not change much.
In the direction of regeneration:
According to SMM data, the monthly operating rate of recycled lead in April totaled 48.73%, a significant decline of 10.04 percentage points compared with March, mainly due to the fact that April coincided with the traditional off-season of lead-acid battery consumption, low demand for waste battery replacement, limited scrap supply shortage, and a significant decline in raw material inventory of recycled lead refineries, resulting in a reduction in production in many recycled lead smelters across the country.
In addition, it should be noted that in late April, the "reverse invoicing" policy of the recycling industry was announced, and the increase in taxes and fees raised the recycling costs of waste battery traders. After the return of the May Day holiday, the average spot price of waste electric vehicle batteries once again stood at the integer mark of more than 10,000 yuan/ton, and continued to rise in recent trading days. As of May 13, the spot price of waste electric vehicle batteries has risen to 10,175~10,425 yuan/ton, and the average price is 10,300 yuan/ton.
Inventory:
In early April, due to the continued strength of Shanghai lead, while the spot market trading was relatively light, the spot price spread continued to widen, prompting the delivery of brand delivery enthusiasm, coupled with the approaching delivery in the middle of the month, the lead ingot inventory continued to increase. However, in late April, under the background of unexpected production reduction in primary lead smelters due to insufficient supply of waste batteries, the inventory of lead ingots as a whole showed a downward trend. As of April 29, the total social inventory of SMM lead ingots in the five places was about 53,100 tons, down 2,100 tons from 56,200 tons at the end of March.
In terms of downstream consumption:
According to SMM research, in April, lead-acid batteries entered the traditional off-season of consumption, and the overall operating rate declined compared with March, and the monthly operating rate of SMM lead-acid batteries in April was about 71.65%, down 3.9 percentage points from 75.55% in March. At the beginning of April, coinciding with the Qingming holiday, some lead-acid battery companies have holiday arrangements, although enterprises have resumed production after returning from the holiday, but in the off-season situation of the electric bicycle and automobile battery market has not changed, and the lead price trend is strong in the background, the battery production cost has risen, and the production enterprises can not quickly pass on the rising cost to the battery sales end, some enterprises have taken the initiative to reduce the production of production, near the end of April downstream ushered in the May Day holiday, some enterprises have a holiday, dragging down the lead-acid battery operating rate continues to decline.
Overall, the lead market in April showed a situation of both supply and demand, and in the context of the off-season of downstream lead-acid batteries, the production reduction of primary lead and recycled lead smelters intensified in late April, coupled with factors such as tight supply of lead concentrate ore and waste batteries and financial favor, jointly promoted lead prices in April to show a strong shock trend.