[Secondary Lead Production Updates] A smelter in east China cut production this week due to insufficient raw materials, and its weekly production of secondary refined lead fell by 1,400 mt/day.

SMM August 6 news: Overnight, LME lead opened at $1,893/mt, drifted higher to $1,907.5/mt during Asian trading hours before weakening. Entering the European session, it gave back most gains and dipped to $1,883.5/mt, eventually closing at $1,890/mt, flat from the previous close. Overnight, the most-traded SHFE lead 2609 contract opened at 15,735 yuan/mt, briefly touched a high of 15,745 yuan/mt then drifted lower. Bulls reduced positions, pushing the contract to a low of 15,600 yuan/mt in late trading, and it finally settled at 15,640 yuan/mt, down 0.73%. Supply side, primary lead smelters saw additional maintenance in August, with production expected to decline. Secondary lead output also has a downside expectation, but attention should be paid to the recovery in lead prices lifting smelter production enthusiasm, with some enterprises likely to resume production ahead of schedule. Moreover, lead ingot social inventory is staying high, and we need to be wary of the pullback risk from suppliers moving ingots out of warehouses before delivery. Overall domestic consumption was neutral: demand in the e-bike segment was conservative and relatively stable from July to August; auto sector demand was mixed, with enterprises handling export orders performing well, while those serving the domestic market underperformed. In summary, the exit of bears has led to a short-term rebound in lead prices to catch up, but the consumption picture will determine how much room this rebound has.

Fresnillo reported revenue of $3.38 billion for the six months ended June 30, 2026, up 74.7% year on year. Its average realised by-product lead price was $0.87/lb, down 2.3% year on year, while the average realised by-product zinc price rose 27% to $1.55/lb. Attributable by-product lead production increased 8.8% year on year, supported by higher ore grades at Fresnillo and Juanicipio and partly offset by lower grades at Saucito. Attributable by-product zinc production was broadly stable. The company maintained its 2026 guidance for attributable lead production of 54,000–59,000 t and attributable zinc production of 85,000–95,000 t. Attributable silver output in H1 was 22 million oz, down 11.4% year on year, while attributable gold output fell 7.3% to 290,900 oz.

[SMM Primary Lead Production] It is understood that national primary lead output rebounded significantly in July 2026, rising 7.44 percentage points MoM and 11.03 percentage points compared to the same period last year. Cumulative primary lead output in January-July 2026 increased 5.41 percentage points YoY, mainly driven by production resumptions after maintenance at lead smelters in southwest China, northeast China, and east China.

[Secondary Lead Production Update] A secondary lead smelter in southwest China had average refined lead output in July, with relatively low recycling volume of scrap batteries. In August, there is a possibility of maintenance-related production suspension. If production continues, it will maintain a similar output level. The final production schedule will be adjusted according to the lead price market trend.

[Secondary Lead Production Update] A secondary lead smelter in North China currently has a daily refined lead output of less than 300 mt, with daily raw material arrivals of only 5-6 truckloads, which is insufficient to support production, leading to continuous consumption of raw material inventory. The enterprise stated that output may be halved or even suspended next month, and production will continue only if raw material supply is sufficient.

[Secondary Lead Production Dynamics] A secondary lead smelter in Northwest China recently halted production, with a daily impact of 120 mt on secondary refined lead output. The enterprise plans to decide on resuming production in August based on market conditions. If lead prices remain persistently weak, it will choose to extend the production halt.

It is understood that this week (July 17, 2026 – July 23, 2026), the combined operating rate of primary lead smelters in three provinces was 66.77%, up 0.48 percentage points WoW. The rebound in operating rates of primary lead smelters this week was mainly driven by the resumption of normal production at some smelters in Hunan province. Previously, affected by raw material undersupply, enterprises were in a state of production cuts. Recently, as production recovered, lead output rebounded. Next week, a medium-to-large smelter in Hunan plans to undergo maintenance, which is expected to bring a certain amount of production reduction. In Yunnan, a small-to-medium primary lead smelter is about to complete maintenance, and subsequent attention will be paid to its production resumption progress.

SMM expects secondary lead prices to remain in the doldrums in H2. High scrap battery costs provide rigid bottom support for lead prices, but triple negative factors—macro rate hike expectations, high LME inventories, and the downstream consumption off-season—continue to cap the upside room……

Recently, China's lead prices have continued to weaken. Secondary smelters have been broadly trapped in a dual predicament of production losses and a shortage of scrap battery raw materials. SMM's statistics on production cuts and resumption plans at secondary lead enterprises across the country in June–July clearly reflect the current pressure on the industry.