Report Title - Lead Weekly Report: Weak Supply and Demand, Lead Price in Range-bound Fluctuation [1] Report Industry Investment Rating - Not provided Core Viewpoints - The domestic lead market shows weak supply and demand. The low inventory and reduced production of recycled lead support the Shanghai lead price, while the weakening consumption restricts the upward space of the lead price. It is expected that the lead price will maintain range-bound fluctuations [4]. - Trading strategies suggest a range-bound approach for single-sided trading, and temporary observation for arbitrage and options trading [4]. Summary by Directory Chapter 1: Market and Logic 1.1 Trading Logic and Strategy - **Supply Side**: The domestic lead concentrate processing fee this week reached 300 yuan/metal ton, and the SMM weekly processing fee for imported lead concentrate reached -135 US dollars/dry ton. Near the end of the year, the lead concentrate market remained inactive. For imported ores, some bids were as low as -200 US dollars/dry ton, with only a small amount of rigid-demand transactions. The processing fees for domestic ores were mostly for pre-sales in 2026, and remained stable in December [4]. - **Smelting Side**: The weekly operating rate of SMM's three - province primary lead smelters was 67.35%, a 1.82% increase from last week. The operating rates in Henan and Hunan remained stable. Although some smelters in Hunan were affected by environmental inspections, the electrolytic lead production remained stable this week, and is expected to decline slightly next week. A medium - large - scale smelter in Yunnan increased production after maintenance, and a small - scale smelter also slightly increased production. The SMM weekly operating rate of recycled lead in four provinces was 41.61%, a 3.75% decrease from last week. Due to air pollution control in East and North China, smelting enterprises in Anhui significantly reduced production. If the control is lifted this weekend, normal production will resume [4]. - **Consumption Side**: The weekly comprehensive operating rate of SMM's five - province lead - acid battery enterprises was 74.23%, a 0.41% decrease from last week. Since December, the implementation of the new national standard for electric bicycles has not significantly improved actual consumption. Instead, due to consumers being in the adaptation period, the decline in vehicle sales has dragged down battery consumption, leading some enterprises to reduce or plan to reduce production. The automotive battery market has entered the traditional consumption peak season, and the operating rates of most medium - and large - scale enterprises are relatively stable [4]. - **Inventory Data**: As of December 18, the total social inventory of SMM lead ingots in five regions was 20,500 tons, basically unchanged from December 11 and a decrease of 1,400 tons from December 15 [4]. 1.2 - 1.5 - These sections cover information on futures prices, price spreads, inventory data, and lead industry chain inventory, but specific data and analysis details are not fully presented in the text [5][8][11][15] Chapter 2: Raw Material End 2.1 - 2.3 - These sections involve raw material supply, including global and domestic lead ore production, lead concentrate imports, imports of silver concentrates, and the supply of recycled lead raw materials such as lead - containing waste and waste batteries. However, specific data and analysis details are not fully presented in the text [20][24][32] Chapter 3: Smelting End 3.1 - 3.7 - These sections cover aspects such as the global refined lead balance, domestic refined lead imports and exports, primary lead smelting enterprise profits, primary and recycled lead supply, and domestic lead ingot supply. However, specific data and analysis details are not fully presented in the text [39][46][47] Chapter 4: Demand End 4.1 - 4.4 - These sections analyze the demand for lead, including lead - acid batteries, lead alloys and their plates, the automotive industry, and industries such as motorcycles, electricity, and communication. However, specific data and analysis details are not fully presented in the text [71][74][79][82]

Group 1: Report Industry Investment Rating - Not provided in the content Group 2: Core Viewpoints of the Report - The lead market is in a stage of divergence between "current shortage and expected surplus." The low inventory and cost - loss bottom of secondary lead limit the downside, but without new consumption drivers and with a confirmed long - term surplus, the price will maintain a high - level range - bound pattern [3] - In the short - term, the sharp increase in LME inventory eases the overseas squeeze risk and puts pressure on LME lead. In the domestic market, the low inventory leads to a "reluctance to sell" sentiment, but the upside pressure level is difficult to break through [7] - In the long - term, the core contradiction lies in the mismatch between the profit - repair cycle of the secondary lead industry and the downstream demand recession cycle. If the downstream lithium - battery substitution is faster than the supply clearance, the lead price center will move down in the long run [9] Group 3: Summary by Relevant Catalogs Chapter 1: Core Contradictions and Strategy Recommendations 1.1 Core Contradictions - Strong current situation: Domestic lead ingot social inventory and smelter inventory have both reached 15 - month lows, offsetting the year - end weak consumption. The supply side shows a structural differentiation, with primary lead production increasing after maintenance and secondary lead production decreasing due to raw material shortages and environmental protection [3] - Weak expectations: The market expects a supply surplus in 2026, with overseas supply growth exceeding demand growth [3] 1.2 Trading - Type Strategy Recommendations - Futures unilateral: Range operation (buy low and sell high). Buy long positions in the range of 16,750 - 16,800 with a stop - loss at 16,600, and take profit and reverse to short positions around 17,100 [9] - Arbitrage strategy: Pay attention to cross - market reverse arbitrage (long SHFE and short LME) [9] - Option strategy: Sell wide - straddle options. Sell put options with an exercise price of 16500 and call options with an exercise price of 17300 [9] 1.3 Industrial Customer Operation Recommendations - For inventory management with high finished - product inventory, sell 75% of the Shanghai lead main - contract futures at 17400 to hedge against price drops [10] - For raw - material management with low raw - material inventory, buy 50% of the Shanghai lead main - contract futures at 16500 to hedge against price increases [10] Chapter 2: This Week's Important Information and Next Week's Attention Events 2.1 This Week's Important Information - **Likely positive drivers**: Supply disruptions intensify as the Australian Nyrstar Port Pirie smelter's union votes for industrial action, and the weakening US dollar provides a valuation - repair window for non - ferrous metals [11] - **Likely negative drivers**: A sharp increase in LME inventory and the cooling of interest - rate cut expectations [12] - **Spot transaction information**: The daily average price of SMM 1 lead is 16725 yuan/ton, down 0.15%; the average price of recycled lead is 16775 yuan/ton, up 0.45% [13] 2.2 Next Week's Important Events to Watch - **Domestic**: The release of China's one - year loan prime rate (LPR) on December 22; monitor whether the lead ingot social inventory will show an inflection point of accumulation due to year - end account closing [13] - **International**: The Christmas holiday in Europe and America on December 25 may cause abnormal market fluctuations; follow the progress of the strike at the Nyrstar Port Pirie smelter [14] Chapter 3: Market Interpretation 3.1 Price - Volume and Capital Interpretation - **Domestic market**: The lead price closed at 16880 yuan/ton this week. Profitable positions are mainly short in net positions. The domestic basis structure is stable, and the monthly - spread structure of Shanghai lead maintains a C - structure [15][17] - **International market**: As of 15:00 on Friday, LME lead was at 1973 US dollars/ton. The LME lead maintains a C - structure [20][38] Chapter 4: Valuation and Profit Analysis 4.1 Upstream - Downstream Profit Tracking in the Industry Chain - Analyze the processing fees of primary lead and the relationship between lead - concentrate monthly production and processing fees [43] 4.2 Import - Export Profit Tracking - Examine the import - profit and loss and import volume of lead concentrates, as well as the seasonal patterns of refined - lead and lead - battery imports and exports [45] Chapter 5: Supply - Demand and Inventory Projections 5.1 Supply - Demand Balance Sheet Projections - Analyze the seasonal patterns of domestic lead ingot total supply and actual consumption [50] 5.2 Supply - Side and Projections - Examine the monthly production of lead concentrates, electrolytic lead, and secondary refined lead, as well as the seasonal patterns of global lead - mine and refined - lead production [52][54][59] 5.3 Demand - Side and Projections - Analyze the seasonal patterns of lead - battery开工率, exports, and imports, and the inventory days of lead - battery enterprises and dealers [61][64]

Group 1 - The core viewpoint of the article indicates that the lead market is experiencing a stable yet weak demand-supply balance, with no significant positive factors to boost lead prices in the near term [1] - On August 27, 2025, LME lead spot premium was reported at -$38.74 per ton, while SMM 1 lead ingot spot price decreased to 16,775 RMB per ton, a drop of 25 RMB per ton from the previous change [1] - The Shanghai, Guangdong, Henan, and Tianjin regions showed corresponding changes in lead spot prices and premiums, while the price difference between lead scrap and refined lead remained unchanged [1] Group 2 - The futures market saw the main Shanghai lead contract open at 16,925 RMB per ton and close at 16,890 RMB per ton, reflecting a decrease of 40 RMB per ton, with a total trading volume of 49,426 lots and an open interest of 49,915 lots [1] - The night session opened at 16,885 RMB per ton and closed at 16,875 RMB per ton, down 15 RMB per ton from the afternoon close [1] - As of August 27, 2025, SMM lead ingot inventory totaled 68,000 tons, a decrease of 0.16 million tons compared to the same week last year, while LME lead inventory was reported at 267,475 tons, down by 1,500 tons [1] Group 3 - The strategy remains neutral, with the lead market expected to oscillate between 16,300 and 17,050 RMB per ton due to a lack of significant bullish factors in the fundamentals, despite macroeconomic factors favoring the non-ferrous sector [1] - The options strategy suggested is to sell wide spreads, with risk factors including a significant increase in domestic supply, lower-than-expected consumption, and tightening overseas liquidity [1]

Report Summary 1. Investment Rating No investment rating for the industry is provided in the report. 2. Core View The lead market is currently in a situation of weak supply and demand. The high - level operation of domestic primary lead smelters has increased the demand for raw materials, but the import of lead concentrates has decreased, leading to a decline in processing fees. The high price of lead - containing waste materials has caused secondary lead smelters to remain in a loss state, and the supply side may tighten. Although the traditional peak season for lead - acid batteries is approaching, it is still in the off - season currently, and the battery enterprises' procurement and production are still cautious. Therefore, lead prices are expected to maintain range - bound fluctuations [3]. 3. Summary by Directory 1.1 Transaction Logic and Strategy - **Industrial Supply and Demand**: Domestic primary lead smelters' high - level operation has increased the demand for lead concentrates, with domestic and imported lead concentrate processing fees decreasing. The recycling of lead - containing waste materials is difficult, and waste prices have risen slightly. The operating rates of primary and secondary lead smelters have declined. The operating rate of lead - acid battery enterprises has increased slightly. Lead inventories in some regions have changed. Due to the tight supply of raw materials and high waste prices, the supply side may tighten. Although the peak season for lead - acid batteries is approaching, it is still in the off - season currently, and the operating rate has not increased significantly. Under the situation of weak supply and demand, lead prices may maintain range - bound fluctuations [3]. - **Trading Strategy**: For the short - term, lead prices will fluctuate within a range. One can buy a small number of far - month long positions at low prices. For arbitrage, it is advisable to wait and see [3]. Chapter 2: Raw Material End - **Primary Raw Material Supply**: The report mentions global and domestic lead ore production, lead concentrate imports, and import profits and losses [16]. - **Secondary Raw Material Supply**: It includes the price of lead - containing waste materials and the raw material inventory of secondary lead smelters [24]. Chapter 3: Smelting End - **Global Refined Lead**: Covers the balance, production, and demand of global refined lead [30][32][34]. - **Domestic Refined Lead Import and Export**: Involves import and export profits and losses, import and export volumes, and net export volumes [36]. - **Primary Lead Smelting Enterprise Profit**: Includes lead concentrate processing fees, smelting profits, sulfuric acid revenue, and silver revenue [37]. - **Primary Lead Supply**: Comprises the operating rate and production of primary lead smelting enterprises, and the production of major electrolytic lead delivery brands [39][40]. - **Secondary Lead Enterprise Cost and Profit**: Mentions the comprehensive cost and profit of scale and small - and medium - scale secondary lead enterprises [41][45]. - **Secondary Lead Supply**: Covers the operating rate and production of secondary lead smelting enterprises, and the production of secondary crude lead [49][50]. - **Domestic Lead Ingot Supply**: Consists of the total supply of domestic lead ingots, primary lead production, secondary lead production, and net exports of refined lead [51][52]. Chapter 4: Demand End - **Lead - Acid Batteries**: It includes the operating rate of lead - acid battery enterprises, dealer and enterprise finished - product inventories, and import and export volumes [57][58]. - **Lead Alloys and Their Plates**: Involves lead alloy prices, import and export of lead alloys, lead plates, and other lead plates [59][60]. - **Automobiles**: Covers Chinese automobile production, exports, and the production structure of traditional fuel vehicles and new - energy vehicles [61][62]. - **Motorcycles, Electricity, and Communications**: Includes motorcycle production, power engineering, grid engineering, communication construction volume, and power supply engineering [63][64].