Report Summary 1. Report Industry Investment Rating No information provided. 2. Core Viewpoints - This week, the Shanghai lead futures fluctuated strongly. The main contract 2508 of Shanghai lead futures was active, with a weekly increase of 0.99%. The market trading was active. Affected by overseas de - stocking, the weakening dollar, and the increasing expectation of interest rate cuts, the price of Shanghai lead fluctuated upward. The overall amplitude was good. After the market rose with the short - term positive fermentation, there were signs of a decline on Friday. The price was still under the annual - line suppression, and the market continued to rise for two consecutive weeks, showing a good long - term trend [5]. - In terms of supply, the operating rate and output of primary lead smelters increased due to the rising lead price. The supply of recycled lead raw materials increased slightly, and the profit increased slightly with the rising lead price. The overall operating rate and supply of recycled lead increased, but it was difficult to reverse the raw material bottleneck in the short term, and the supply increase was limited. In terms of demand, the overall market transaction was weak, and the support for lead prices was limited. Affected by the "lithium replacing lead" trend and high - temperature weather, the operating rate of battery enterprises in five provinces decreased. In terms of inventory, overseas inventory declined again, while domestic inventory increased slightly, and warehouse receipts increased, mainly due to the obvious price difference between the domestic and overseas markets, resulting in an arbitrage space. The lead concentrate processing fee began to decline, which would have a negative impact on the subsequent production of recycled lead and primary lead. In general, the overall supply of Shanghai lead is expected to increase slightly next week. Affected by the marginal decline of national subsidies for consumption, domestic inventory will increase slightly, and overseas inventory will decline again. With the introduction of the "Big Beautiful Act", the demand for economic stimulus is obvious, and lead prices are expected to continue to rise in the short term [5]. - It is recommended that the main contract 2508 of Shanghai lead fluctuate mainly, with a fluctuation range of 16,900 - 17,600 and a stop - loss range of 16,500 - 17,900. Pay attention to the operation rhythm and risk control [5]. 3. Summary by Directory 3.1 Week - on - Week Summary - **Market trend**: This week, the Shanghai lead futures fluctuated strongly. The main contract 2508 rose 0.99%, and the market trading was active. Affected by overseas de - stocking, the weakening dollar, and the increasing expectation of interest rate cuts, the price fluctuated upward. After rising with the short - term positive fermentation, there were signs of a decline on Friday. The price was still under the annual - line suppression, showing a good long - term trend [5]. - **Market outlook**: Supply is expected to increase slightly next week. Due to the marginal decline of national subsidies for consumption, domestic inventory will increase slightly, and overseas inventory will decline again. With the introduction of the "Big Beautiful Act", the demand for economic stimulus is obvious, and lead prices are expected to continue to rise in the short term [5]. - **Operation suggestions**: The main contract 2508 of Shanghai lead fluctuates mainly, with a fluctuation range of 16,900 - 17,600 and a stop - loss range of 16,500 - 17,900. Pay attention to the operation rhythm and risk control [5]. 3.2 Futures and Spot Market - **Price comparison**: This week, the domestic futures price of Shanghai lead increased compared with last week, and the overseas futures price also increased, while the ratio decreased. As of July 4, 2025, the futures closing price (electronic disk) of LME 3 - month lead was $2,058.5 per ton, and the futures closing price of the active contract of lead was 17,295 yuan per ton. The Shanghai - London ratio of lead was 8.40 [7][11]. - **Premium and discount**: The domestic futures premium and discount weakened, and the overseas premium and discount also weakened. As of July 4, 2025, the Chinese futures premium and discount was - 270 yuan per ton, and the LME lead premium and discount (0 - 3) was - $26.47 per ton [13][15]. - **Inventory situation**: Overseas lead inventory decreased, while domestic inventory increased, and the number of warehouse receipts increased. As of June 26, 2025, the total inventory of lead was 53,100 tons, an increase of 2,800 tons; the total LME lead inventory was 265,900 tons, a decrease of 7,525 tons. The number of warehouse receipts for Shanghai lead was 46,439 tons, an increase of 1,161 tons [28][32]. 3.3 Industry Chain - **Supply side - Primary lead**: The operating rate and output of primary lead smelters increased due to the rising lead price. As of June 26, 2025, the average operating rate of primary lead in major producing areas was 76.8%, an increase of 2.96% compared with last week; the weekly output of primary lead was 35,800 tons, an increase of 100 tons compared with last week [18][20]. - **Supply side - Recycled lead**: The capacity utilization rate and output of recycled lead enterprises decreased. The main reason was the decrease in waste lead recycling. Currently in the off - season, there were fewer scrap batteries, resulting in passive production cuts. As of June 26, 2025, the domestic output of recycled lead in major producing areas was 17,400 tons, a month - on - month increase of 600 tons; the average capacity utilization rate of recycled lead was 36.97%, a month - on - month increase of 0.65% [24][27]. - **Supply side - Number of enterprises**: As of May 31, 2025, the total number of recycled lead production enterprises was 68, remaining unchanged [34][36]. - **Supply side - Import and export**: The export of refined lead was obvious, and the import of refined lead increased significantly. The overseas lead ingot price was higher than the domestic price, and the domestic processing fee was low, resulting in an arbitrage space. In May, the export volume of refined lead was 5,555 tons, a month - on - month increase of 64.9% and a year - on - year increase of 118.41%; the total import volume of Chinese lead ingots (crude lead + refined lead) was 11,830 tons, a month - on - month increase of 580 tons, an increase of 5.16%, and a year - on - year increase of 6,020 tons, an increase of 103.51%. The import volume of refined lead was 4,410.959 tons, a month - on - month decrease of 6.82% and a year - on - year increase of 3058.56%. Among them, the import from Kazakhstan was 3,620.889 tons, a month - on - month decrease of 17.25%; the import from the Philippines was 402.789 tons, a month - on - month increase of 294.78%. The import volume of crude lead was 7,420 tons, a month - on - month increase of 900 tons, an increase of 13.80%, and a year - on - year increase of 1,760 tons, an increase of 31.16% [38][40]. - **Demand side - Processing fee**: The domestic lead concentrate processing fee remained flat, and the import processing fee also remained flat. The low processing fee led to an arbitrage space, and the market began to import lead for processing and then export it. As of June 27, 2025, the national average processing price of lead concentrate was 640 yuan per ton, and the average monthly value of the processing fee TC for imported lead concentrate (Pb60) was - $40 per thousand tons [42][44]. - **Demand side - Automobile production and sales**: Automobile production and sales showed a marginal decline. In May 2025, the domestic automobile production was 2.649 million vehicles, a month - on - month increase of 1.1% and a year - on - year increase of 11.6%; the sales volume was 2.686 million vehicles, a month - on - month increase of 3.7% and a year - on - year increase of 11.2%. For passenger cars, the production was 2.313 million vehicles, a month - on - month increase of 2.5% and a year - on - year increase of 12.8%; the sales volume was 2.352 million vehicles, a month - on - month increase of 5.8% and a year - on - year increase of 13.3%. For commercial vehicles, the production was 336,000 vehicles, a month - on - month decrease of 7.4% and a year - on - year increase of 4.4%; the sales volume was 335,000 vehicles, a month - on - month decrease of 8.8% and a year - on - year decrease of 2%. For new energy vehicles, the production was 1.27 million vehicles, a year - on - year increase of 35%; the sales volume was 1.307 million vehicles, a year - on - year increase of 36.9%, and the new - energy vehicle sales accounted for 48.7% of the total new - vehicle sales. The automobile export was 551,000 vehicles, a month - on - month increase of 6.6% and a year - on - year increase of 14.5%. Among them, the new - energy vehicle export was 212,000 vehicles, a month - on - month increase of 6.1% and a year - on - year increase of 120% [46][48]. - **Demand side - Battery and charging piles**: The battery price remained flat, and the growth rate of the number of public charging piles slowed down. As of May 2025, the number of national charging piles was 4,082,800. As of July 4, 2025, the average price of 48V/20AH waste lead batteries in Zhejiang was 394 yuan per group [50][53].

1. Report Industry Investment Rating - The investment rating for lead is bullish [1] 2. Core Views of the Report - After expected adjustments, the supply - demand contradiction this year is relatively reduced, and the import volume may decline, but the market remains in a tight - balance state. The price center of Shanghai lead futures may rise in the second half of the year, with the reference operating range of 16,100 - 18,500 yuan/ton. Based on the expectation of strong supply and demand, it is recommended to focus on unilateral long - position opportunities for Shanghai lead futures. The monthly spread structure may change from C to B, and it is advisable to pay attention to positive spread arbitrage opportunities. There is also an expectation of intermittent opening of the import window, and an interval - trading approach is recommended [4][123] 3. Summary According to the Catalog 3.1 Market Review - In H1 2025, the price centers of Shanghai and London lead futures were significantly lower than the same period in 2024. In Q1, Shanghai lead showed an inverted V - shaped trend due to supply - demand mismatch around the Spring Festival. In Q2, it dropped sharply due to the US tariff increase, then rebounded as the US dollar weakened and overseas structural risks emerged, along with the anticipation of peak - season demand stocking [15] 3.2 Macroeconomic Aspects - Overseas, the Fed's interest - rate cut path is the core variable, affected by trade protection and geopolitical conflicts. A potential rate cut in Q3 may briefly boost London lead, but the rebound is limited by demand. Trade protection may suppress China's lead export demand. Geopolitical risks may increase external - market volatility. Domestically, policy - driven consumption is crucial for lead demand. Although previous consumption - promotion policies had limited effects, future demand may rely more on policy support. Macroeconomic impacts are reflected in the internal - external price ratio [18][19] 3.3 Primary End 3.3.1 Lead Concentrate - Overseas, Q1 2025 lead - concentrate production was lower than expected, with a year - on - year decline of 1.4 million tons and a quarter - on - quarter decline of 3 million tons. The decline was due to factors like lower ore grades, weather disturbances, and mining difficulties. Although there are expectations of increased production from some mines this year, the overall increment is limited, and there are still risks of disturbances in H2. Domestically, lead - concentrate production increased in H1 2025, and imports were high. The annual production is expected to increase by 5 million tons, and the import growth rate is expected to be around 9%. However, the processing fee (TC) may decline in H2 due to tight overseas supply and trade - flow risks [23][33][34] 3.3.2 Primary Lead - Overseas, from January to April 2025, primary - lead production showed a recovery trend, mainly due to the low base in H1 2024. This year, new primary - smelting capacity is limited, and lead concentrate will mainly be consumed through imports. Domestically, from January to June, primary - lead production increased by 9.7% year - on - year. In H2, attention should be paid to the commissioning of new capacities. The annual production growth rate is expected to be around 2% [50][54][55] 3.4 Secondary End - In 2025, the over - capacity of waste - battery processing has intensified, and new capacities are squeezing traditional ones. Recycling merchants have increased their hoarding and advanced the hoarding time. From January to June, secondary - lead production decreased by 4.4% year - on - year. In H2, although there is an expectation of improved replacement demand, waste batteries will remain in short supply, and secondary - smelter profits will be under pressure. Attention should be paid to the possibility of capacity reduction [62][63][68] 3.5 Demand End 3.5.1 Lead Batteries - In H1, battery - enterprise operations were below expectations. In H2, there may be a phased improvement in consumption. In terms of exports, although there was an improvement in H1, the overall annual export demand is expected to decline by 1% [75][100][104] 3.5.2 Domestic Terminal Demand - For electric two - wheelers, production increased in H1, mainly due to consumption - promotion policies. The new national standard and trade - in policies may stimulate demand, but lithium - battery substitution is a long - term risk. For automobiles, production increased in H1, but export may face pressure in H2, and lithium - battery substitution will also affect lead - battery demand. In the communication - base - station and energy - storage sectors, base - station equipment production decreased, while energy - storage demand was strong, and the lead - consumption growth rate is expected to reach 8% [82][87][92] 3.5.3 Overseas Demand - In 2025, overseas lead demand generally recovered, with an increase in Southeast Asia and a decline in India. China's lead - battery exports decreased in H1, and the annual export volume is expected to be under pressure due to factors such as weak overseas demand, high domestic costs, trade protection, and battery - factory expansion overseas [94][100][104] 3.6 Inventory End - In H1, LME lead inventory was high, indicating weak overseas consumption. Domestically, social inventory was at a relatively low level at the end of June. In H2, social inventory may fluctuate widely, and potential delivery risks should be noted due to tight ore supply. There is also a possibility of the import window opening intermittently, and attention should be paid to interval - trading opportunities based on the internal - external price ratio [108][112][121] 3.7 Investment Recommendations - The supply - demand contradiction is expected to be reduced this year, but the market remains in a tight - balance state. The price center of Shanghai lead futures may rise in H2, with a reference range of 16,100 - 18,500 yuan/ton. Unilateral long - position opportunities for Shanghai lead futures are recommended, as well as positive spread arbitrage opportunities for monthly spreads and interval trading based on the internal - external price ratio [4][122][123]

Core Viewpoint - The article discusses the competitive landscape between lithium batteries and lead-acid batteries, highlighting the advantages of lithium batteries in terms of lightweight and high performance, despite their higher costs [1]. Group 1: Regulatory Changes - In 2024, new safety standards for lithium-ion batteries used in electric bicycles and scooters will be implemented, emphasizing the importance of battery safety [2]. - The new standards include mandatory puncture tests to ensure batteries do not catch fire or explode under extreme conditions, which is expected to promote the healthy development of the lithium battery market for two-wheeled vehicles [3]. Group 2: Safety Enhancements - The PRO-M high-safety battery from BAK Battery incorporates a three-tier protection system to mitigate thermal runaway risks, utilizing high-temperature resistant materials and advanced manufacturing processes [4]. - BAK Battery has established a comprehensive safety system covering research, testing, and manufacturing, ensuring consistent quality through stringent parameter management [5]. Group 3: Market Dynamics - The ongoing cost competition between lithium and lead-acid batteries is highlighted, with BAK focusing on domestic material substitution and efficiency improvements to lower costs [6]. - BAK Battery is targeting the electric motorcycle market, particularly in countries where electric motorcycles are a primary mode of transport, and plans to introduce small-capacity batteries for cost-sensitive rural markets [6]. - The trend towards high-end and intelligent battery solutions is noted, with increasing consumer demand for long-range, fast-charging, and smart battery management systems driving companies to enhance performance beyond mere safety compliance [6].