The scale of the downturn in China's lead-acid battery export market is difficult to overstate. Full-year 2025 shipments fell 12% against the prior year, but the deterioration accelerated sharply through the second half. December 2025 marked the nadir: exports plunged 33.86% year-on-year, the deepest single-month decline in recent memory. The data, compiled by China Customs and analyzed by SMM, paints a picture of a sector caught between overproduction at home and inventory saturation abroad. (FACT: SMM via news.metal.com, 2026)
SMM's "gloomy" characterization of the 2026 outlook rests on four structural forces, none of which show signs of abating. First, China's lead smelting industry is operating well above efficient utilization rates, with capacity additions in recent years having overshot demand growth. The result is persistent downward pressure on domestic margins and an incentive to export — a pressure that is now colliding with an equally powerful headwind of weak overseas demand. (FACT: SMM, 2026)
Second, overseas battery inventories remain elevated following a period of aggressive restocking through 2023 and early 2024. Distributors in Southeast Asia, Africa, and the Middle East — traditional destination markets for Chinese lead-acid batteries — are holding ample stockpiles and have reduced new order volumes accordingly. The destocking cycle has been prolonged by slower-than-expected end-user demand in key markets, including automotive aftermarkets and telecom infrastructure buildouts. (FACT: SMM, 2026)
Third, the domestic-international price spread for refined lead has proven too narrow to stimulate arbitrage-driven export activity. Chinese lead prices, supported by urban-mining subsidies and relatively low secondary smelter cash costs (estimated below $900/t for leading recyclers), have not fallen far enough below international benchmarks to create a compelling export margin for battery producers. LME lead's rangebound behavior below $2,020/t has only reinforced this dynamic. (FACT: SMM, 2026; Mordor Intelligence, 2025)
Fourth, and perhaps most critically for the medium-term outlook, China's domestic battery demand is itself showing signs of fatigue. The e-bike market — which accounted for roughly 30% of domestic lead-acid battery consumption — is undergoing a structural shift toward lithium-ion alternatives as regulatory pressure and consumer preferences evolve. Automotive battery replacement demand, traditionally a stable floor, is also being eroded by extended battery lifespans and incremental electrification of the vehicle fleet. (FACT: SMM, 2026; ILZSG, 2026)
The implications for the global lead market are significant. China is the world's largest producer and exporter of lead-acid batteries, and a sustained 12%+ decline in its export volumes represents a substantial demand-side shock. In the short term, this excess Chinese battery inventory flows back into the domestic scrap supply chain, further depressing secondary lead prices and compressing the already tight margins at Chinese smelters. Over a longer horizon, it raises the possibility that Chinese producers will redirect output toward stationary energy storage applications — a development that could reshape competitive dynamics in the fast-growing battery energy storage system (BESS) sector. (FACT: SMM, 2026)
SMM's outlook for H2 2026 does not anticipate a rapid turnaround. They expect export volumes to remain under pressure through at least Q3, with a potential bottom forming in Q4 if — and it remains a significant if — destocking in overseas markets runs its course and the price spread widens sufficiently to restore export economics. But with LME lead anchored near $2,000/t and Chinese secondary smelter costs kept low by policy subsidies, that spread recovery is far from guaranteed.
For global buyers: The export slump means Chinese battery supply is less available, but don't expect a rally — the surplus in refined lead and high overseas inventories mean alternatives from Southeast Asian and Indian producers can fill the gap without price tension.
For secondary smelters: The domestic glut of scrap from unsold batteries will keep feedstock costs low for Chinese recyclers, widening the cost advantage they hold over integrated primary producers internationally.
For investors: Watch the monthly China Customs data as a leading indicator. If the December-style 33%+ declines persist into Q2 2026, it signals a much deeper demand problem than markets currently price in. Any stabilization to single-digit declines would be the first green shoot.