This week, the weekly TCs of domestic Pb50 concentrate were lowered by 50 yuan/mt Pb to an average of 150 yuan/mt Pb, and domestic TC center continued to edge lower. From June to July, domestic lead concentrate output edged down slightly due to safety and environmental protection inspections, tailings storage issues, and rainy season maintenance shutdowns, strengthening mines' bargaining power. Meanwhile, primary lead smelters' core profit source is sulphuric acid and associated metals (silver, copper, zinc, etc.), and their comprehensive profit currently stands above 1,000 yuan/mt. Driven by profits and raw material replenishment, companies continue to compete for ore. During the week, SMM learned that a mine in South China concluded a Q3 lead concentrates transaction of 2,800 mt Pb, with the transaction price set at the arithmetic average of the monthly weekly average TCs of SMM domestic Pb50 concentrate in the pickup month minus 1,015 yuan/mt Pb, with lead content of 55%, silver content of 300-400 g/mt, and a silver coefficient of 95.99% (copper less than 1g and around 7g zinc not valued); the TC fell 300 yuan/mt Pb MoM. Meanwhile, over the week, imported TCs outside China fell further by $5/dmt to -$165/dmt, mainly due to unresolved overseas port logistics and strikes, and Peru entering a 60-day state of emergency due to El Niño, keeping long-term mine supply disruptions in place. Traders held prices firm and held back from selling.

SMM, June 25: This week, aluminum fluoride enterprises focused on delivering orders. Approaching month-end, the market awaited new price guidance. Trading sentiment was sluggish, and prices remained stable. As of now, SMM aluminum fluoride prices closed at 11,280-11,700 yuan/mt; cryolite prices held steady, with SMM quoting 7,000-8,500 yuan/mt. Raw material side: China’s 97% wet-process fluorite market was generally stable this week, with mainstream delivered prices at 3,100-3,400 yuan/mt and regional price differences persisting. On the supply side, high-grade resources remained tight due to safety and environmental protection inspections and production restrictions at small mines. This was compounded by a slowdown in imports from Mongolia and limited spot circulation, keeping inventories low and strengthening miners' willingness to hold prices firm. Demand side showed clear divergence. Traditional refrigerants were in the off-season, with losses at hydrofluoric acid firms suppressing purchases, which remained predominantly need-based and under long-term contracts. However, demand for lithium battery electrolytes and electronic-grade hydrofluoric acid was stable, providing support for high-quality fluorite. Overall, the supply tightness is unlikely to ease in the short term, and incremental imports are limited, with prices most likely holding up well. Nonetheless, downstream appetite to chase higher prices was insufficient, capping any gains. China’s aluminum hydroxide market edged up within a narrow range this week; the SMM weighted average aluminum hydroxide price was 1,698 yuan/mt, a slight increase of 0.89% WoW. Upstream cost support kept spot quotations firm, while downstream purchases were only as needed on a need-to basis, limiting overall transaction volume growth. The sulphuric acid market moved sideways at high levels, with price changes difficult in either direction. Low upstream sulphur spot inventory further consolidated the cost floor; combined with acid producers cutting production due to losses and clustered maintenance shutdowns across regions, supply in certain areas became relatively tight. However, the phosphate fertilizer sector entering its off-season and subdued purchase willingness capped sharp price increases for acid, while steady demand from the LFP new energy sector and fine chemicals provided bottom support. Synthesizing raw material-side performance this week, the fluorite market remained stable, while aluminum hydroxide and sulphuric acid rose, with divergent raw material price trends pushing up the comprehensive production cost of aluminum fluoride. The supply side continued operating under a pattern of persistently rigid high costs, sustained profit pressure, and low operating rates. Synchronized strength in sulphuric acid and aluminum hydroxide this week drove up overall production costs, pushing the industry into widespread losses. Incidents of enterprise maintenance shutdowns and flexible production cuts increased, with the industry operating rate holding at a low level of around 40%, limiting the incremental supply of effective spot cargo. On the demand side, the operating aluminum capacity downstream remained high and stable, providing a rigid support floor for aluminum fluoride demand. However, aluminum smelters only purchased as needed for rigid demand restocking, while simultaneously pushing for lower prices and standing by, with no release of additional incremental procurement. Summary: There was no significant directional catalyst in the aluminum fluoride market this week. The firm cost side continued to support prices, and the industry remained in a state of high costs, low profits, and low operating rates. In the short term, upstream raw material prices remain the core factor influencing the market, with limited downstream demand growth, and the market is likely to continue the tug-of-war between upstream and downstream. Next month, aluminum fluoride prices are expected to have strong downside support and some upside elasticity. However, constrained by the procurement pace of end-users, the room for price increases will still hinge on raw material costs and procurement changes at aluminum enterprises.

Next week, macro data releases will include China’s May CPI annual rate, the US May unadjusted CPI annual rate, and the preliminary US June one-year inflation expectations, all of which are about to be released. Additionally, US-Iran peace talks have seen repeated setbacks, and the US is planning to impose additional tariffs on over 60 global economies under Section 301 of the Trade Act of 1974, leaving the macro environment clouded by numerous uncertainties. Furthermore, China’s head of state will pay a state visit to North Korea from June 8 to 9. On the LME lead front, following two consecutive weeks of heavy deliveries into warehouses, LME lead inventory hit a 13-year high. Meanwhile, a supply gap for high-grade lead ingots persists in Southeast Asia. Even though environmental protection inspections on secondary lead have concluded in the Vietnam market, spot lead continues to trade at widespread, high premiums, causing the LME lead ingot inventory buildup to reverse and shift into a decline. Overseas macro uncertainties abound, pressuring the base metals complex lower. Looking ahead, attention should be paid to the strong supportive factor of supply gaps for lead ore and lead ingots. LME lead is expected to trade within $1,990-2,050/mt next week. On the SHFE lead side, a supply-demand mismatch for lead ingots in China and inventory buildup risks are weighing on lead prices. Additionally, with futures delivery approaching, invisible inventory will be converted to visible inventory. During the lead price decline, secondary lead losses have widened, and supply of lead ore and scrap batteries has been tight, leaving limited downside room for lead prices. The most-traded SHFE lead contract is expected to trade within 16,200-16,650 yuan/mt next week. Spot price forecast: 16,200-16,500 yuan/mt. On the supply side, the post-maintenance recovery of primary and secondary lead has paused for now. Furthermore, with secondary lead losses widening, secondary refined lead has formed an inversion over primary lead. Coupled with potential delivery brand shipments to delivery warehouses, circulating supply is expected to tighten relatively, and spot discounts are expected to narrow further. On the consumption side, downstream enterprises are merely producing based on sales, and after the lead price drop, they have not engaged in concentrated procurement as witnessed during the mid-to-late May decline. They are expected to maintain just-in-time procurement.

[Ex-China Lead Market Dynamics] It was learned that the recent environmental protection inspections on secondary lead in the Vietnamese market had temporarily come to an end, and some lead smelters had gradually resumed production. However, in the face of the current primary lead supply gap, spot lead in the local market continued to maintain high premiums. According to the latest information, the CIF premium for Vietnamese lead ingots with Pb≥99.99% in June had reached $180/mt as a common transaction price, compared to around $165/mt in May.

SMM News, May 29: As of May 28, secondary lead finished product inventories stood at 21,700 mt, up 280 mt WoW from May 21. This week, environmental protection inspections in Guangdong concluded, and enterprise capacity was gradually recovering. In addition, lead prices fluctuated at highs, and downstream battery enterprises showed low purchase willingness. Looking ahead to next week, the sluggish end-use consumption trend is expected to continue. Spot order supplies in the market are expected to remain tight with firm offers, limited room for price negotiation, and significant transaction resistance, and the pace of finished product inventory digestion is expected to continue to slow down.

[Brief Review of China's Iron Ore Market] The domestic ore market in western Liaoning saw cautious trading. Currently, the wet-basis tax-inclusive ex-factory price of 66-grade iron ore concentrates stood at 730-735 yuan/mt. Mines and beneficiation plants maintained firm asking prices, but buyers mostly adopted a wait-and-see approach with no purchase willingness at this price level. Affected by the coal mine accident in Shanxi, most mines were concerned about stricter safety and environmental protection inspections and dared not operate easily. Some large mines even planned to halt production for maintenance in the near term to avoid risks. Available spot cargo resources were expected to tighten further, providing some support for local ore prices. However, iron ore futures showed a weak trend recently.