How Did Lead Prices Perform in H1 2025?
The first half of 2025 witnessed significant fluctuations in lead prices, influenced by a complex interplay of macroeconomic factors, supply-demand dynamics, and policy changes. Lead prices demonstrated remarkable resilience despite various market pressures, with distinct monthly patterns emerging throughout the period. The review of lead prices in the past six months reveals important trends for market participants to consider.
January 2025: Narrow Trading Range Before Chinese New Year
January saw lead prices initially decline before staging a modest rebound. Unlike December 2024's volatile swings exceeding 1,000 yuan/mt, January's trading range narrowed significantly to approximately 600 yuan/mt, indicating market consolidation ahead of the holiday period.
"As the Chinese New Year holiday approached, lead-acid battery enterprises gradually arranged for year-end inventory preparation and holiday schedules," noted SMM analysts in their market report. This seasonal pattern resulted in weakened pre-holiday demand.
Large enterprises adopted notably cautious purchasing strategies, focusing primarily on essential procurement rather than speculative buying. Consequently, spot premiums dropped rapidly despite SHFE lead's resistance to decline, reflecting the divergence between paper and physical markets.
One surprising development was that LME lead inventory decreased by over 20,000 metric tons during the month despite an early surge, suggesting underlying supply tightness in global markets.
February 2025: Post-Holiday Recovery and Tariff Concerns
SHFE lead prices started positively after Chinese New Year, climbing above 17,000 yuan/mt as market participants returned from the holiday. However, this upward momentum was quickly tempered by the announcement of potential US tariff effects, creating significant market uncertainty.
According to SMM analysis, "Domestic end-use consumption after the holiday fell short of expectations, and producers were not enthusiastic about resuming production, mostly operating in a produce-based-on-sales mode." This cautious approach limited supply increases that might typically follow the holiday period.
Despite relatively stable prices, spot market transactions remained sluggish throughout February. Meanwhile, LME lead continued its destocking trend while prices fluctuated at elevated levels, creating a complex intermarket dynamic.
What Factors Drove Lead Price Movements in Spring 2025?
March 2025: Bullish Momentum and Supply Increases
March marked a significant turning point as several positive factors converged to drive prices higher. The U.S. Federal Reserve's dovish stance notably weakened the dollar index, providing substantial support for metal prices across the board. LME lead capitalized on this favorable macro environment, reaching a high point of $2,104.5/mt.
In China, the annual "Two Sessions" political meetings yielded economic policy announcements that boosted market sentiment considerably. SHFE lead responded by hitting 17,805 yuan/mt, its highest level in nearly three months.
On the supply side, primary and secondary lead smelters resumed production in a concentrated manner following the holiday season. This resumption, combined with new capacity commissioning, resulted in a dramatic increase in monthly lead supply—over 50% higher than the previous month and reaching an 18-month high.
An interesting market anomaly occurred as the import window briefly opened, allowing crude lead shipments to enter China. However, this supply influx, coupled with renewed tariff market impact and seasonal weakness, triggered a late-month price reversal that erased much of March's gains.
April 2025: Tariff Implementation and Seasonal Pressure
April proved challenging for lead markets as the U.S. "reciprocal tariff" policy implementation triggered significant volatility. The impact was immediate and severe—LME lead recorded ten consecutive days of losses, bottoming at $1,837.5/mt, the lowest level since September 2022.
Similarly, SHFE lead fell below the psychologically important 17,000 yuan/mt threshold, reaching a low of 16,165 yuan/mt as market sentiment deteriorated. The traditional off-season for lead-acid batteries further weakened demand fundamentals.
"In mid-to-late April, domestic secondary lead cost support played a role, coupled with increased demand from downstream enterprises building inventories at low prices, causing lead prices to gradually rebound," reported SMM analysts. This cost-based support provided a floor for prices, with opportunistic inventory building by downstream enterprises helping stabilize the market.
By month-end, prices had gradually rebounded to approximately 17,000 yuan/mt, demonstrating the market's resilience despite the challenging environment.
How Did Market Dynamics Shift in Late H1 2025?
May 2025: Policy Support vs. Fundamental Weakness
May brought potentially positive macro developments as U.S.-China dialogue resulted in the cancellation of 91% of previously announced tariffs and suspension of the remaining 24%. Additionally, the People's Bank of China announced reserve requirement ratio cuts and interest rate reductions aimed at stimulating economic activity.
Despite these seemingly supportive policy moves, lead prices struggled to gain significant traction. "Despite the release of these two favorable macro news items, lead prices did not show a significant upward trend. Instead, they were dragged down by fundamental factors," explained SMM analysts.
Prices consolidated between 16,500-17,000 yuan/mt throughout May, reflecting the market's cautious outlook. Lead-acid battery manufacturers further reduced production during this period, with some enterprises extending downtime during the Labor Day holiday.
A concerning development was the increase in lead ingot inventory despite reduced supply, indicating persistent demand weakness. Similarly, LME lead inventory grew by over 20,000 mt, effectively capping price gains at the $2,000/mt resistance level.
June 2025: From Doldrums to Recovery
Early June saw renewed U.S. tariff concerns initially weaken prices toward 16,500 yuan/mt. Spot prices actually fell below this level, creating buying opportunities for price-sensitive consumers.
Downstream enterprises gradually increased purchasing at these lower price points, reflecting a strategic approach to inventory management. According to SMM analysis, "Lead ingots were transferred from smelter in-plant inventories to downstream enterprise in-plant inventories, leading to an improvement in apparent consumption."
Mid-to-late June witnessed emerging price support from several factors:
- Increased smelter maintenance activities
- Environmental protection inspections affecting production
- Delayed production resumptions at secondary lead facilities
These supply constraints led to the gradual depletion of primary lead inventories. Consequently, prices rebounded above 17,000 yuan/mt, reaching a three-month high of 17,270 yuan/mt by month-end—a remarkable recovery from early-month lows.
What's Happening with Lead Prices in Early July 2025?
Current Market Conditions
Lead prices have maintained their upward momentum into early July, with the SHFE lead contract reaching 17,315 yuan/mt—extending the recovery that began in late June. This strength comes despite expectations of increased supply from maintenance completions and new capacity commissioning.
Two counterbalancing forces are currently shaping the market:
- Supply constraint: Tight raw material availability continues to support prices
- Demand expectation: Anticipation of the upcoming peak consumption season
The lead-acid battery market is currently transitioning from its traditional off-season to the peak production period. "Some enterprises are showing relatively improved production enthusiasm," according to SMM analysis, with traditional pre-peak season inventory building underway.
Key Market Constraints
Several critical factors are limiting both upside and downside price potential:
Raw material limitations present a significant constraint, potentially restricting lead ingot production despite increased production capacity. The scarcity of waste lead-acid batteries is particularly concerning for secondary lead producers.
Market participants remain cautious about terminal consumption improvement in the lead-acid battery sector. While seasonal patterns suggest increased demand, uncertainty persists regarding the strength of this year's peak season compared to historical norms.
Renewed tariff concerns continue to create market uncertainty, with U.S. policy implementation scheduled for August 1, 2025. The potential for further trade tensions looms over market sentiment.
What Are the Major Factors Influencing Lead Prices?
Macroeconomic and Policy Factors
The scheduled implementation of U.S. "reciprocal tariffs" on August 1, 2025, represents the most significant macroeconomic risk factor. These potential tariffs include a 50% levy on copper and 200% on pharmaceuticals, signaling aggressive trade policy that could affect the broader metals complex including copper price insights.
International responses to U.S. tariff threats have varied significantly:
- Japan and South Korea are seeking continued negotiations to mitigate impact
- South Africa has presented arguments for tariff reductions
- Brazil has condemned the measures while emphasizing potential retaliation
- Germany has issued warnings about EU retaliatory measures
The U.S. Federal Reserve's monetary policy stance remains critical, with markets closely monitoring inflation expectations and employment data for clues about future interest rate trajectories.
Supply-Side Considerations
A notable structural shift is occurring in global lead supply. Declining overseas lead and zinc mine production has reduced concentrate availability, limiting the supplementary role of imported lead concentrates in the Chinese market.
"Due to the impact of tariffs and the decline in overseas lead and zinc mine supply, the supplementary role of imported lead concentrates in the domestic market will be relatively limited in H2," SMM analysts observed.
This supply constraint has contributed to a continued decline in processing charges (TCs) for lead concentrates, increasing production costs for primary smelters. Consequently, waste lead-acid batteries have gained importance as a supplementary raw material source.
A critical market imbalance exists in the secondary lead sector, with significant production overcapacity coinciding with waste battery undersupply. This mismatch has created upward pressure on scrap battery prices, intensifying competitive pressure among secondary lead producers.
What's the Outlook for Lead Prices in H2 2025?
Seasonal Patterns and Market Expectations
The lead market traditionally experiences its peak consumption season during August-September, driven by increased demand for lead-acid batteries. This seasonal pattern typically supports prices in the early part of H2 before giving way to weakness later in the year.
"As the weather cools, the consumption of mainstream lead-acid batteries will weaken," noted SMM analysts, with operating rates at leading producers expected to decline accordingly. This seasonal demand reduction will likely reduce purchasing appetite for lead ingots as the year progresses.
Secondary lead smelters may enter maintenance periods due to profitability pressures, particularly if scrap battery prices remain elevated. Primary lead smelters, meanwhile, are expected to maintain relatively stable production except for planned maintenance activities.
One concerning trend is the potential decline in Christmas-related battery export orders compared to previous years. "Due to tariff events, battery export orders related to Christmas may see a significant year-on-year decline," according to SMM analysis.
Price Trajectory Forecast
The market consensus points to a challenging environment for altering the pattern of high domestic raw material prices in H2. Analysts anticipate that the lead price trend will likely rise initially during the peak season before declining as seasonal factors weaken.
Interestingly, the overseas market is expected to outperform the domestic market in late 2025, creating potential arbitrage opportunities for international traders. This divergence reflects differing supply-demand dynamics between Chinese and international markets.
Market participants are advised to maintain vigilance regarding tariff-related risks, which could introduce significant volatility regardless of fundamental factors. As one SMM analyst noted, "Bearish sentiment will begin to dominate the market" as the year progresses.
What Factors Will Shape Lead Market Fundamentals?
Raw Material Supply Dynamics
The persistent high prices for scrap batteries create significant pressure on secondary lead producers' margins. "SMM expects that the price of scrap batteries will remain more likely to rise than fall in H2," highlighting a key challenge for industry profitability.
The structural imbalance between secondary lead production capacity and waste battery availability continues to intensify competition. This overcapacity situation forces producers to accept compressed margins or reduce utilization rates.
Import restrictions and declining global mine output limit the supplementary role of imported lead concentrates. Processing charges for lead concentrates are likely to continue declining, reflecting this tightening supply situation.
Demand-Side Considerations
The lead market is currently transitioning from off-season to peak season for lead-acid batteries. This shift traditionally drives increased consumption and supports prices through the summer months.
After the National Day holiday, the traditional "winter stockpiling" period will approach, potentially providing temporary demand support. However, this may be offset by weather cooling, which typically weakens consumption patterns for lead-acid batteries.
Export-oriented battery producers face particular challenges, with potential for significant year-on-year declines in orders due to tariff events. This export weakness could reduce overall lead demand despite domestic seasonal strength.
As the year progresses, declining operating rates at battery producers will likely reduce willingness to purchase lead ingots, creating downward price pressure in the later months of 2025.
Market Balance and Inventory Trends
The movement of lead ingots from smelter inventories to downstream enterprises has improved apparent consumption despite underlying demand weakness. This inventory redistribution has supported prices in recent months but may not be sustainable long-term.
Primary lead inventory depletion amid maintenance activities has created localized supply tightness. However, this could reverse quickly once maintenance concludes and production normalizes.
LME lead inventory fluctuations add another layer of uncertainty, particularly as global trade flows adjust to tariff implementations. These inventory changes will provide important signals about global market balance in the coming months.
FAQs About Lead Price Trends
What caused the sharp decline in lead prices in early April 2025?
The implementation of the U.S. "reciprocal tariff" policy triggered substantial market volatility. LME lead recorded ten consecutive days of losses, with prices falling to $1,837.5/mt—the lowest level since September 2022. This policy created significant uncertainty throughout the non-ferrous metals complex, with lead particularly vulnerable due to its relatively thin trading volumes.
Why did lead prices rebound in late June despite seasonal weakness?
The rebound was primarily driven by supply-side factors rather than demand improvement. Increased smelter maintenance activities, environmental protection inspections affecting production, and delayed production resumptions at secondary lead facilities all contributed to tightening supply. These constraints led to the gradual depletion of primary lead inventories, creating upward price pressure despite traditionally weak seasonal demand.
How are tariff policies expected to impact lead prices in H2 2025?
The scheduled implementation of U.S. "reciprocal tariffs" on August 1 creates significant uncertainty for lead markets. Prices may initially jump on supply concerns before pulling back as market participants adjust to the new trade reality. The tariffs will likely reduce China's battery export orders compared to previous years, potentially weakening overall lead demand. Market participants should remain vigilant about policy developments that could introduce volatility regardless of underlying fundamentals.
What is the relationship between scrap battery prices and lead market dynamics?
Due to overcapacity in secondary lead production and undersupply of waste lead-acid batteries, scrap battery prices are expected to remain elevated throughout H2 2025. This price pressure increases competitive tensions among enterprises and may force some secondary lead smelters into maintenance periods due to profitability challenges. The scrap battery market effectively acts as a floor for overall lead prices, as secondary production becomes uneconomical when lead prices fall too far below scrap costs.
How do seasonal factors affect lead prices throughout the year?
Lead prices typically strengthen during the August-September peak consumption season for lead-acid batteries. This pattern reflects increased production of batteries for automotive, electric vehicle, and energy storage applications during this period. As weather cools later in the year, battery consumption typically declines, with operating rates falling at battery producers and diminishing willingness to purchase lead ingots. This seasonal pattern is further influenced by export cycles, particularly for Christmas-related orders, which may be weaker than usual in 2025 due to tariff impacts.
Disclaimer: This article contains market analysis and price forecasts based on current information and expert opinions. All predictions involve uncertainty and should not be considered investment advice. Economic conditions, policy changes, and unforeseen events may significantly alter market outcomes. Readers should conduct their own research and consult financial advisors before making investment decisions based on this information.
Additional Resources
Readers interested in deeper analysis of lead market dynamics can explore related educational content at Shanghai Metal Market (SMM), which provides regular updates and analyses on non-ferrous metals markets including lead, available at www.metal.com. Their reports offer valuable insights into price movements, supply-demand balances, and policy impacts across the metals complex.
For those specifically focused on the battery sector, monitoring both lead price trends and battery manufacturing trends provides a more comprehensive view of market direction. The interplay between raw material costs and end-product demand remains crucial for understanding this complex market ecosystem.
Additionally, investors tracking commodities markets should consider the broader context of resource price movements, including the iron ore price decline and other mining industry trends that may indicate important shifts in global industrial activity.
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