[SMM Cast Aluminum Alloy Morning Comment: Easing Costs and Sluggish Demand Keep Aluminum Alloy Prices in the Doldrums] Last Friday, the ADC12 market was generally in the doldrums. As aluminum prices weakened, cost support eased, and some enterprises actively lowered their quoted prices.

As the lead industry continues to develop, the supply imbalance in the raw material sector is intensifying. In terms of lead concentrates, the tight supply situation is worsening. Additionally, due to the historically relatively high prices of gold and silver, smelters' demand for high-grade lead concentrates has increased. Meanwhile, the domestic processing fees for lead concentrates have continued to hit new lows. In terms of scrap, according to the SMM survey, in recent years, the generation of scrap batteries has not matched the processing capacity for scrap batteries. The capacity of secondary lead is in a state of oversupply. In 2024, the new capacity of secondary lead continued to increase, while the domestic supply of scrap was limited. Moreover, there was a loss of scrap in exports. Coupled with the traditional off-season in the lead-acid battery market in the first half of the year, with battery scrap volumes at a low point for the year, the supply imbalance has intensified. To enable industry peers to have a clearer and more intuitive understanding of the global market distribution of lead ingot raw material industries, SMM, in collaboration with Zhejiang Gang Lianjie Logistics Technology Co., Ltd., is proud to launch the "2025 Global Lead Ingot Raw Material Enterprise Resource Distribution Map". After annotation and typesetting, it will be printed and distributed to upstream and downstream customers in the industry. It aims to provide an authoritative, comprehensive, and professional overview of the lead ingot raw material industry, establish a communication bridge between enterprises across the industry chain, break down information barriers between upstream and downstream sectors, and jointly promote the healthy and green development and upgrading of the lead industry. Zhejiang Gang Lianjie Logistics Technology Co., Ltd., is an AAAA-level comprehensive service logistics enterprise affiliated with the Ningbo Zhoushan Port Group system. It is a joint venture established by Zhejiang Seaport Logistics Group and Box Technology (Shenzhen) Co., Ltd. It has obtained China Quality Management System Certification, with the number: 00124Q37205ROM/3302, and is a state-controlled enterprise. Relying on the brand advantages of Ningbo Zhoushan Port, the company adheres to the principle of taking Ningbo Zhoushan Port as the main body and closely revolves around the strategic business layout of Ningbo Zhoushan Port to provide customers with modern and comprehensive logistics services. The company has opened an Anhui branch in 2023, established a Malaysian subsidiary, and will open a German subsidiary in Wilhelmshaven, Germany, by the end of 2024. Currently, the Thai company has completed its registration and is in further planning. The company can provide logistics services centered on Malaysia and Thailand, radiating to various Southeast Asian countries, including but not limited to door-to-door cargo pick-up, warehouse (warehousing and in-warehouse operations), ocean freight booking, import and export customs clearance, etc. In terms of business performance, the company has ranked first in import agency volume at Ningbo Port for two consecutive years (2023 and 2024) and first in non-ferrous metal agency volume at Ningbo Port. It has also been honored with the "Top Ten Import Freight Forwarding Enterprises" award for two consecutive years in 2023 and 2024. Domestically: In terms of import business, the company provides full-chain import logistics services, covering international multimodal transport, port customs clearance, bonded customs declaration, transportation, warehousing, etc., covering almost all bulk raw materials: such as non-ferrous metals, plastic pellets, agricultural and sideline products, pulp, grain, recycled materials, hazardous goods, cold chain, bulk cargo, petroleum and petrochemical products, food, minerals, etc. Overseas: Zhejiang Gang Lianjie (Malaysia) Logistics Technology Co., Ltd. (a subsidiary), located in Selangor, Malaysia, 20 kilometers away from Port Klang West, 23 kilometers away from Port Klang North, and 34 kilometers away from the Port Klang Bonded Free Trade Zone. It is mainly engaged in international freight forwarding for imports and exports, with Malaysia as the center to radiate throughout Southeast Asia, and carries out related businesses. Contact Information Chen Dong (Imports) 13901649539 Zhu Yong, Overseas Project Leader and General Manager of the Malaysian Subsidiary 18501669898 Chen Lei (Imports) 13857876948 Shi Qihao (Imports) 13777188184 Contact Person for SMM Map Co-production Tian Cheng 19521491689 tiancheng@smm.cn

Since April, the operating rate has declined by about 30 percentage points due to tight raw material supply, high costs, weak end-use consumption, and poor lead ingot sales. The low scrap volume of waste lead-acid batteries has led to scarce market supply and significant pressure on recyclers. Secondary lead smelters face tight scrap battery arrivals, low raw material inventories, and high purchase offers. Intense competition for raw materials and customer-specific price increases have further complicated the situation. Lead prices remained sideways during the week, with downstream battery producers showing a strong wait-and-see sentiment. Secondary lead smelters had low willingness to sell due to cost pressure, and the spot market for secondary refined lead was sluggish. As of May 16, the theoretical profit and loss value for large-scale secondary lead enterprises was -592 yuan/mt, and -820 yuan/mt for small- and medium-sized enterprises.

[SMM Analysis: Why Are Secondary Lead Smelters Facing Such Difficulties as Operating Rates Continue to Decline?] SMM News on May 16: According to SMM, the tight supply of raw materials for secondary lead has led to high costs, while weak end-use consumption has resulted in poor sales of lead ingots. The combined pressure of losses from these two factors is a key inhibitor of production enthusiasm among enterprises... As the current selling price of secondary lead is lower than the cost, losses are inevitable once sold; most enterprises would rather accumulate inventory than ship goods. Amidst the sentiment of "upstream sellers not selling and downstream buyers not buying," the trading activity in the spot order market for secondary refined lead is low.

The secondary lead industry is facing difficulties during the off-season for lead-acid battery consumption. Low scrap volumes due to reduced battery replacements, combined with intense competition among recyclers, create significant pressure for scrap dealers to collect waste batteries. Secondary lead smelters are struggling with poor arrivals of waste batteries and high costs, resulting in losses of 600-800 yuan per ton of secondary refined lead. High lead ingot inventories and weak demand from downstream battery manufacturers further exacerbate the situation. Despite plans for new capacity in May, production cuts are anticipated as the industry grapples with tight raw material supplies and declining output.

[SMM Analysis: Review of the Lead Market During the Labour Day Holiday and Market Outlook After the Holiday] SMM May 5 Report: Due to the Labour Day holiday, the Shanghai Futures Exchange suspended night session trading from April 30 onwards. From May 1 to 5, which was the holiday period, no trading took place for SHFE lead, and the domestic spot lead market also entered a state of suspended trading. However, the London Metal Exchange in overseas markets continued trading as usual...