Chinese secondary lead production is rising as seasonal conditions improve for scrap collection. Secondary smelters, which process recycled lead from used batteries, account for approximately 50 percent of China's total lead output. Higher scrap availability in warmer months typically enables increased production rates.
This seasonal supply increase is coinciding with softer demand. The northern hemisphere summer typically sees reduced battery replacement activity, as extreme heat in some regions and milder conditions in others both reduce battery stress. The automotive battery replacement cycle, a key demand driver, usually troughs in the June-August period.
The combination of rising secondary output and softening demand is expected to exert downward pressure on lead prices in the near term. Fastmarkets notes that fundamentals are expected to soften in the coming months, consistent with the seasonal pattern observed in prior years.
However, the downside may be limited by the broader supportive macro environment for base metals. If copper and aluminum continue their upward trajectory, lead may benefit from spillover investor sentiment and general commodity inflation expectations.