Report Industry Investment Rating - The absolute price strategy is cautiously bearish, and the option strategy is to sell calls [3][4] Core View - Due to the off - season of lead - acid battery consumption, weak downstream stocking willingness, and rising inventory, combined with the relatively tight lead ore resources, the lead price is expected to be in a weak and volatile pattern in the future. It is recommended to sell on rallies for hedging, with the selling range above 16,850 [3] Summary by Related Catalogs Market News and Important Data Spot - On June 3, 2025, the LME lead spot premium was - 22.17 dollars/ton. The SMM1 lead ingot spot price decreased by 25 yuan/ton to 16375 yuan/ton compared with the previous trading day. The SMM Shanghai lead spot premium decreased by 75 yuan/ton to - 20.00 yuan/ton. The SMM Guangdong lead price decreased by 25 yuan/ton to 16425 yuan/ton, the SMM Henan lead price remained unchanged at 16400 yuan/ton, and the SMM Tianjin lead price decreased by 25 yuan/ton to 16450 yuan/ton. The lead refined - scrap price difference remained unchanged at 75 yuan/ton. The price of waste electric vehicle batteries decreased by 75 yuan/ton to 10125 yuan/ton, the price of waste white shells decreased by 75 yuan/ton to 10000 yuan/ton, and the price of waste black shells decreased by 50 yuan/ton to 10325 yuan/ton [1] Futures - On June 3, 2025, the opening price of the SHFE lead main contract was 16650 yuan/ton, and the closing price was 16570 yuan/ton, a decrease of 50 yuan/ton compared with the previous trading day. The trading volume was 28541 lots, a decrease of 24390 lots compared with the previous trading day, and the position was 55547 lots, an increase of 2217 lots compared with the previous trading day. The intraday price fluctuated, with the highest point reaching 16685 yuan/ton and the lowest point reaching 16525 yuan/ton. In the night session, the opening price of the SHFE lead main contract was 16575 yuan/ton, and the closing price was 16635 yuan/ton, a 0.36% increase from the afternoon closing price of the previous day [2] Inventory - On June 3, 2025, the total SMM lead ingot inventory was 5.0 million tons, an increase of 0.05 million tons compared with the same period last week. As of November 28, the LME lead inventory was 283150 tons, a decrease of 1000 tons compared with the previous trading day [2]

Report Industry Investment Rating - The rating for Shanghai lead is "volatile", with a wide - range oscillation mainly within the range of 16,800 - 18,500 yuan/ton [3][4][71]. Core Viewpoints of the Report - The cost support from waste batteries and demand limit the upside of lead prices. In the second quarter, lead prices may shift to wide - range oscillations. However, due to the persistent shortage of raw materials, the probability of a sharp decline in lead prices in the second quarter is low. It is advisable to adopt a low - buying strategy in the medium - term, and pay attention to the actual performance and sustainability of replacement demand and energy storage increments [4][71]. Summaries According to Related Catalogs 1. Market Performance in Q1 2025 - Lead prices showed a generally bullish trend in Q1 2025, with two cycles of "sustained rise and periodic sharp decline". After the Spring Festival, lead prices soared due to expectations of demand recovery and low inventory accumulation in the industry chain, then fluctuated around 17,000 yuan/ton. Subsequently, there were sharp declines and rebounds due to various factors such as rumors of downstream production cuts, inventory accumulation, and changes in supply - demand relationships [5][8]. 2. Overseas Lead Mine Supply - In 2024, the global lead concentrate production was basically flat year - on - year. In Q1 2025, overseas disturbances decreased significantly, and production was expected to be basically flat quarter - on - quarter. In Q2 2025, there might be an obvious recovery due to the low base in the previous year. The expected overseas lead mine increment in 2025 is about 103,000 metal tons, but the improvement will be less than that of zinc [12][13][14]. 3. Domestic Lead Mine Supply - In 2024, the domestic lead mine shifted from shortage to tight balance. It is expected that the domestic lead mine increment in 2025 will be about 20,000 metal tons, mainly in the second half of the year. In Q1, the lead concentrate import window remained open, and in Q2, imports may decrease quarter - on - quarter but increase year - on - year. The TC has an expectation of increase in the medium - term, but the increase is highly limited [20][24]. 4. Domestic Primary Lead Production - Overseas primary lead production in 2024 was 1.454 million tons (YoY + 1%), and in January 2025, the global lead market had a supply surplus of 1,000 tons. Domestic primary lead production from January to February was 568,000 tons (YoY - 0.2%), and in March, production increased significantly by 40,000 - 50,000 tons. In Q1 2025, production was expected to be 913,000 tons (YoY + 5.7%). In Q2, there is an expectation of raw material inventory consumption, and it is difficult to repair smelting profits [28]. 5. Domestic Secondary Lead Production - It is estimated that the secondary lead production in Q1 2025 was 725,000 tons (YoY - 6.4%). Waste batteries are expected to be in a more severe shortage in 2025 compared to last year. With the operating loss of secondary lead smelters, there is a possibility of large - scale production cuts in the second quarter when demand weakens [36][47]. 6. Lead Demand - **Initial - stage demand**: After the Spring Festival, the start - up of battery enterprises was generally lower than expected. In April, the traditional lead - acid battery demand entered the off - season, and it is necessary to pay attention to the production arrangements of large enterprises in the future. Energy storage batteries showed obvious growth, and lead - carbon battery manufacturers had sufficient production orders [49][51]. - **Terminal demand**: In Q1, terminal demand may have reached its peak and will weaken marginally in Q2. Electric two - wheelers' replacement demand has recovered due to policies, but the lithium - for - lead substitution process may continue in the long - term. The automotive market was strong in Q1 but weakened in Q2. The communication base station equipment production decreased in 2024 and is expected to improve in 2025. Energy storage will contribute obvious increments [52][58]. - **Overseas demand**: The export of lead - acid batteries in 2024 slowed down. From January to February 2025, exports declined significantly. It is expected that the annual export growth rate of batteries will be adjusted down to - 1%. Exports to Belt and Road countries may increase quarter - on - quarter in Q2 [59]. 7. Inventory and Import - **LME inventory**: There was a concentrated delivery in the LME in mid - March, and the overseas consumption capacity of lead ingots remains weak. - **Domestic social inventory**: After the Spring Festival, the supply recovery rate exceeded demand, and the social inventory is currently at a seasonally neutral - to - high level. In April, social inventory may continue to rise in the short - term. - **Lead ingot import**: In Q1, the import profit and loss was close to the import window of crude lead, and some crude lead flowed in. It is possible that crude lead will continue to flow in Q2 [67]. 8. Second - Quarter Fundamental and Trading Logic Outlook - **Primary lead**: In Q2, primary lead smelters will continue to produce. Pay attention to the overseas mine repair progress and the limitations of raw materials and costs on smelting capacity. - **Secondary lead**: The shortage of waste batteries will continue. Secondary lead smelters may cut production after demand weakens. - **Demand**: Policy - driven replacement demand and high - speed growth in the energy storage sector will offset some of the weakening automotive demand and high - ratio - suppressed export demand. Demand may run stably in Q2. - **Trading logic**: Lead prices may shift to wide - range oscillations in Q2. It is advisable to adopt a low - buying strategy in the medium - term, and pay attention to inter - period positive spreads and internal - external reverse spreads [69].