FACT: SMM Secondary Refined Lead Weekly Review, May 22, 2026 Downstream battery plants across China maintained a strong wait-and-see sentiment throughout the week ending May 22, keeping spot transactions subdued. Purchases were limited almost exclusively to rigid demand, with buyers unwilling to build inventory amid uncertain price direction. SMM #1 lead ingot spot prices were initially weak before strengthening alongside futures, but the improvement in price did not translate into volume — overall spot transactions remained sluggish for the entire week.
FACT: SMM Secondary Refined Lead Weekly Review, May 22, 2026 Smelter loss pressure further expanded. As of May 14, large-scale smelting enterprises posted losses of 290 yuan/mt, while small and medium-sized enterprises recorded losses of 496 yuan/mt. The persistent margin compression is putting financial strain on the secondary lead industry, raising the risk of production curtailments if cost-side support does not continue.
FACT: SMM Secondary Refined Lead Weekly Review, May 22, 2026 The secondary refined lead market itself showed diverging dynamics. At the beginning of the week, smelter quotes hovered around parity to slight premiums with very few transactions materializing. Mid-week, quotes stabilized at parity to a 50 yuan/mt premium, with only sporadic purchases from rigid demand buyers. As lead prices rebounded later in the week, smelter shipment sentiment diverged — quotes shifted to discounts of 0–50 yuan/mt at some smelters, while others maintained slight premiums. Downstream players mostly digested inventories accumulated from earlier dip-buying, further cooling purchase willingness.
FACT: SMM Secondary Refined Lead Weekly Review, May 22, 2026 Looking ahead, some smelters plan to resume production in the coming week, meaning secondary refined lead supply is set to increase. This additional supply, combined with weak downstream demand, is expected to put downward pressure on spot premiums. Meanwhile, scrap battery raw material inventories pulled back week-on-week, strengthening cost-side expectations and suggesting smelting profits will remain under pressure, with the loss pattern continuing.
Persistent downstream caution is creating a two-sided challenge for Chinese lead smelters: widening losses from compressed margins on one side, and tepid offtake on the other. With secondary lead output poised to rise as smelters restart production, a buyer's market is emerging in the spot segment. The tug-of-war between cost support from scrap batteries and demand weakness is likely to keep spot premiums converging toward discounts in the near term.
Action: With secondary lead smelters resuming production and spot premiums converging toward discounts, lead buyers should shift toward spot purchasing in the short term rather than locking in term contracts at current premiums. The buyer's market in secondary lead means leverage sits with purchasers, not smelters. For primary lead buyers, the weak downstream offtake extends across both primary and secondary markets — use this convergence to negotiate Q3 term discounts.
Horizon: Monitor over the next 2-3 weeks as smelter restarts add supply. If scrap battery costs continue to erode, the loss pattern for smelters may force curtailments that could reverse the current buyer's market by mid-Q3.
Trigger: Watch SMM secondary lead smelter operating rates — if they decline below 50%, the supply overhang resolves and the buyer's window closes. Also track scrap battery inventories: a sustained draw below seasonal norms would strengthen cost support and force smelters to raise premiums.