Chinese lead exports are accelerating, adding to the global surplus. May's 28,500-ton export figure, reported by China Customs, was the highest since November 2023 and brings the year-to-date export total to 108,000 tons, on pace for 260,000 tons — roughly double 2025's 130,000 tons.
The arbitrage math explains why. SHFE lead at ¥15,680/mt converts to approximately $2,150/mt at the prevailing exchange rate. LME lead at $1,928.5/mt plus roughly $60-80/t in freight and insurance to deliver Chinese lead to Asian LME warehouses gives a landed cost of about $2,000/mt. Chinese smelters also receive a 13% VAT rebate on exports, adding roughly $250/mt to the effective realized price. The net: Chinese smelters earn about $200-250/mt more by exporting than selling domestically.
Asian physical lead premiums have compressed as a result. Spot premiums for 99.97% lead ingot in Singapore and Busan have fallen to $40-60/t over LME cash, down from $60-80/t in March. The influx of Chinese metal is the primary driver, but soft regional demand is also a factor. Korean battery manufacturers reported Q1 lead purchases down 2.8% year-over-year as automotive production growth stalled.
China's domestic lead market is oversupplied despite steady demand. Refined lead production reached 195,000 tons per month in Q2 2026, up 3.8% year-over-year, driven by new secondary smelter capacity. Domestic apparent consumption is roughly 182,000 tons per month, leaving a 13,000-ton monthly surplus that needs an outlet. Exports are the pressure valve.
The arbitrage window won't stay open indefinitely. If Chinese exports continue at this pace, LME lead prices will be pressured lower, narrowing the spread. Alternatively, SHFE prices could correct downward. The ILZSG expects the arb to close by Q4 as seasonal battery demand picks up in China's winter and export incentives diminish. But for now, Chinese lead is flowing, and it's adding to the global surplus.
Chinese lead exports at 28,500 tons/month are adding visible supply to Asian markets and depressing physical premiums. If you source lead in Asia (Singapore, Busan, Johor), premiums at $40-60/t are attractive — they're at the low end of the two-year range. The arb window is driven by SHFE's premium to LME, and when it closes (likely by Q4), Chinese exports will slow and Asian premiums will recover. Lock in Q3 Asian lead at current premiums.