Report Investment Rating No investment rating information is provided in the report. Core Viewpoint Based on the forecast of both supply and demand growth in the lead market in the second half of 2025, prices may show wide - range fluctuations. The main operating range of Shanghai lead is expected to be between 17,000 - 18,500 yuan/ton, with a price center of around 17,500 yuan/ton. The mismatch in the supply - demand structure of waste batteries is the main cause of current industrial contradictions and the core logic driving up waste battery prices. It is expected that the supply of waste batteries will remain tight in 2025. On the demand side, there is still some growth in the electric bicycle industry, but the growth rate of lead - acid batteries in the automotive industry may peak, and the growth rate of domestic demand for new batteries is showing differentiation. External demand performed well in the first half of the year due to the rush - to - export effect, and countries like India and Southeast Asian nations are expected to further expand their lead - acid battery markets, which will drive exports. Overall, with both supply and demand increasing, prices may return to wide - range fluctuations. It is recommended to focus on seasonal fluctuation opportunities [3][54]. Summary by Directory 1. 2025 H1 Lead Market Review - In Q1, lead prices fluctuated strongly. Affected by the production cut expectation of large battery factories at the beginning of the year, the main contract of Shanghai lead once fell below 16,500 yuan/ton. After the Spring Festival, due to the supply - demand mismatch, the downstream battery enterprises resumed production in advance, but the resumption of recycled lead production was restricted by raw material recycling and environmental protection, resulting in a significant supply gap. Coupled with the US tariff policy and the Fed's expected interest - rate cut, the lead price remained high. - In Q2, lead prices first declined and then rebounded. At the beginning of April, global trade frictions led to a sharp decline in lead prices. As the tariff situation eased, the industrial fundamentals supported the price. The price of waste batteries remained strong during the off - season, and recycled lead smelters cut production due to losses, which supported the rebound of Shanghai lead, but the upside was limited due to macro - level disturbances and weak downstream demand [9]. 2. 2025 H2 Lead Price Operation Logic: Supply and Demand Both Increase, Wide - Range Fluctuations 2.1 Frequent Disturbances in Overseas Lead Ore Supply, but There May Still Be Increases for the Whole Year - In Q1, overseas lead ore supply underperformed expectations, and the persistence of disturbances needs further evaluation. Although some mining companies lowered their 2025 production guidance, the overall supply may still increase. Global lead ore production has been rigid in recent years due to low capital expenditure in the lead ore sector. The intensified competition for lead ore from European smelters'复产 has made the shortage of domestic lead ore more prominent. - Many overseas mines faced challenges such as declining ore grades and external force majeure factors in H1 2025, which affected production. For example, Red Dog's zinc concentrate production decreased by 20% year - on - year, and NEXA's lead - zinc mines in Peru had a 31% year - on - year decline in lead concentrate production. - Domestic lead concentrate production increased in 2025, with a 12.61% year - on - year increase from January to May. It is expected that there will be an additional 6 - 8 million tons of lead concentrate production for the whole year. Due to the tight supply of lead concentrate, the processing fee has been declining, squeezing the profit of primary lead smelters, which now rely more on by - product revenues [11][12][15]. 2.2 Changes in the Supply - Demand Structure of Waste Batteries Affect Recycled Lead - The mismatch in the supply - demand structure of waste batteries is the main cause of industrial contradictions and the core logic for the rising price of waste batteries. On one hand, the capacity of domestic recycled lead disassembly and smelting has expanded rapidly, but the growth of waste battery generation has a bottleneck, resulting in a prominent supply - demand gap. On the other hand, the waste battery disassembly capacity of primary lead smelters has been increasing year by year [22]. 2.3 Differentiated Growth Rate of Domestic Demand for New Batteries, and Potential Improvement in External Demand Growth Rate - **Electric Bicycles**: There is an expected increase in the electric bicycle industry. The new national standard has solved consumer pain points and provided space for battery capacity expansion. The new standard allows for larger - capacity lead - acid batteries, which will significantly reduce the experience gap with lithium - ion batteries. The "trade - in" policy also enhances the competitiveness of lead - acid batteries. It is estimated that if the new standard is strictly implemented in 2025, the new lead element consumption may increase by 204,000 tons. - **Automobiles**: The growth rate of lead - acid batteries in the automotive industry may peak. Although lead - acid batteries still dominate the market due to their low cost and high maturity, the advancement of hybrid technology may lead to the replacement of lead - acid batteries with lithium - ion batteries in the long run. - **External Demand**: In January - April 2025, China's lead - acid battery exports increased by 1.83% year - on - year. Affected by the US tariff policy, there was a rush - to - export effect. India and Southeast Asian markets are expected to further expand, which will drive exports [38]. 3. Deepening of Traditional Seasonal Patterns, Anchoring Downstream Restocking Feedback - In Q2, the terminal entered the off - season, and the operating rate of downstream battery enterprises declined. However, the overall restocking space during the off - season still supported the tight supply - demand of lead ingots. Lead elements were more concentrated in the finished - product inventory of terminal dealers. - The production of waste batteries was still low during the off - season, and the price fluctuated weakly. The profitability of waste battery recyclers increased in Q2, indicating the tight supply of waste batteries and the intense competition among recycled lead smelters for raw materials [43].