1. Report Industry Investment Rating - The investment rating for the lead industry is neutral [4] 2. Report's Core View - The lead market currently shows a pattern of weak supply and demand. The supply side is affected by the continuous decline in TC prices and an increase in smelter maintenance. On the demand side, dealers' inventory reduction is slow, and their procurement willingness is low, with some enterprises accumulating finished - product inventory. With the upcoming implementation of the new national standard for electric bicycles in September and the Middle East tariff policy, the impact on consumption is uncertain. Therefore, the lead price is expected to remain in a volatile pattern, with the volatility range likely between 16,300 yuan/ton and 17,050 yuan/ton [4] 3. Summary by Related Catalogs Market News and Important Data Spot - On December 19, 2024, the LME lead spot premium was -$31.73/ton. The SMM1 lead ingot spot price remained unchanged at 16,700 yuan/ton compared to the previous trading day. The SMM Shanghai lead spot premium changed by -50 yuan/ton to 50.00 yuan/ton. The SMM Guangdong lead price remained unchanged at 16,950 yuan/ton, the SMM Henan lead price changed by -75 yuan/ton to 16,725 yuan/ton, and the SMM Tianjin lead spot premium changed by -25 yuan/ton to 16,650 yuan/ton. The lead concentrate - scrap price difference remained unchanged at 50 yuan/ton. The price of waste electric vehicle batteries changed by -50 yuan/ton to 9,925 yuan/ton, the price of waste white - shell batteries changed by -50 yuan/ton to 9,525 yuan/ton, and the price of waste black - shell batteries changed by -50 yuan/ton to 9,975 yuan/ton [1] Futures - On December 19, 2024, the main contract of Shanghai lead opened at 16,795 yuan/ton, closed at 16,730 yuan/ton, unchanged from the previous trading day. The trading volume was 28,827 lots, a decrease of 11,102 lots from the previous trading day, and the position was 43,709 lots, a decrease of 3,629 lots. The intraday price fluctuated, with a high of 16,810 yuan/ton and a low of 16,660 yuan/ton. In the night session, the main contract of Shanghai lead opened at 16,865 yuan/ton and closed at 16,860 yuan/ton, a decrease of 5 yuan/ton from the afternoon close. According to SMM, the SMM1 lead price rose by 25 yuan/ton compared to the previous trading day. In the Henan region, holders quoted at par with the SMM1 lead average price or at a discount of 140 - 120 yuan/ton to the SHFE 2510 contract. In the Hunan region, most lead smelters quoted at a discount of 50 - 30 yuan/ton to the SMM1 lead, and some holders quoted at a discount of 160 - 150 yuan/ton to the SHFE 2510 contract. In the Yunnan region, holders quoted at a discount of over 200 yuan/ton to the SMM1 lead. Although the lead futures price strengthened slightly, downstream buyers mainly made purchases based on rigid demand, and the overall trading in the spot market was weak [2] Inventory - On December 19, 2024, the total SMM lead ingot inventory was 48,000 tons, a decrease of 4,600 tons compared to the same period last week. As of September 3, the LME lead inventory was 234,700 tons, unchanged from the previous trading day [3] Strategy - The recommended option strategy is to sell a wide - straddle [4]

1. Report Industry Investment Rating No information provided in the content. 2. Core Viewpoints of the Report - The lead market has been in a situation of weak supply and demand for a long time, and preparations need to be made in advance for the upcoming changes. The current primary lead production is stable, while the secondary lead production is at a low level. There is an expectation of tightening raw material supply, and some smelters still have room for production cuts. Terminal demand is weak, and it is necessary to wait for inventory clearance, but also be vigilant against the possibility of downstream enterprises ramping up production during the semi - annual report season. In the short term, there are opportunities to buy at low prices, and for arbitrage, both inter - period and domestic - foreign trades should be temporarily observed [4][45]. 3. Summary According to Relevant Catalogs 3.1 Research Objects - The research focuses on primary lead, secondary lead, and lead oxide enterprises in Hunan Province. After the Chinese New Year, refineries mainly resumed production, but issues such as raw material supply and environmental protection control occurred periodically. Starting from April, lead prices fell due to macro - disturbances and weak demand, while the price of scrap batteries increased inversely, leading to an expansion of losses for comprehensive recycling enterprises and a decline in the operating rate of secondary lead refineries. By late May, the contradiction in raw material supply reached a peak, and the cost supported lead prices, but at the same time, the operating rate of battery manufacturers continued to decline, resulting in a situation where Shanghai lead was in a dilemma between rising and falling [12]. 3.2 Key Research Conclusions and Analyses - **Supply - side Pressure**: Most secondary lead refineries in Hunan are operating at half - capacity, and the pressure to ensure supply remains high. The overall operating rate of the five comprehensive recycling enterprises in the research sample is about 50%, mainly due to the shortage of raw material supply. Most enterprises reported difficulties in recent raw material procurement, and the raw material inventory of most secondary lead enterprises has almost reached the bottom. Although enterprises are confident in future raw material supply, concerns about the low - level raw material inventory are inevitable without hedging [2][17]. - **Profitability**: Hunan's lead processing enterprises have different operating conditions, but all sample enterprises reported that their cash flow is not tight and there are no accounts receivable issues. Primary lead enterprises are losing money in lead production alone but are profitable overall due to by - products such as gold, silver, and tin. Among secondary lead enterprises, those using coarse lead and slag as raw materials and having relatively strong recycling capabilities are profitable overall, mainly due to by - products such as copper, tin, and antimony. However, some enterprises using only scrap batteries as raw materials are facing losses. Attention should be paid to the impact of the decline in small - metal prices on corporate profits [2][24]. - **Demand Outlook**: Lead demand was relatively good in March but declined continuously from April to May, and became even weaker after May Day. The overall downstream demand is in a weak period of terminal demand off - season, initial production start - up, and approaching holidays. Most manufacturers agreed that the demand bottom is approaching and believed that demand would not improve until at least July, but they were also worried about the instability of large - scale enterprises' operations [2][29]. - **Other Information**: The earlier heavy - metal pollution incident had limited impact, but air pollution had a greater impact. Most research manufacturers believe that lead prices will fluctuate weakly with limited downside space. Sample enterprises expect a slight decline in the future treatment charge (TC). There are scrap battery price - guarantee policies in various regions, and the price - guarantee time can be adjusted according to the volume [3][37][38]. 3.3 Investment Recommendations - The decline in scrap battery prices is only temporary, and the possibility of a sharp drop is low. Instead, more attention should be paid to the recent raw material procurement situation of price - adjusting manufacturers. In terms of fundamentals, the weak supply - demand pattern of lead has persisted for a long time. Currently, the primary lead production is stable, and the secondary lead production is at a low level. There is an expectation of tightening raw material supply, and some smelters still have room for production cuts. Terminal demand is weak, and demand has basically reached the bottom. Most finished product inventories are concentrated in the middle and lower reaches of the industry chain, and it is necessary to wait for inventory clearance. Be vigilant against the possibility of downstream enterprises ramping up production during the semi - annual report season. Strategically, the downside space of Shanghai lead is limited, and low - buying opportunities can be gradually considered recently. For arbitrage, both inter - period and domestic - foreign trades should be temporarily observed [4][42][45]. 3.4 Research Minutes - **Non - ferrous Metals Joint Enterprise A**: A large - scale domestic mining and metallurgy integrated non - ferrous metals enterprise with a lead smelting capacity of 150,000 tons. The company mainly focuses on deep - processing and alloy products, with a proportion of alloy products exceeding 60%. It produces by - products such as gold, silver, and bismuth. The company has been operating stably with a capacity utilization rate of about 95% this year. It uses both domestic and imported ores, with a 20% - 30% proportion of overseas ores. The long - term contract ratio of primary lead is over 90%. It maintains a one - month raw material inventory and has no finished product inventory. It needs a TC of over 1,000 yuan/ton to make a profit, and the main profit comes from by - products such as matte and tin slag. It hedges both raw materials and finished products [48][49][50]. - **Comprehensive Recycling Enterprise B**: A lead comprehensive recycling enterprise with raw materials all from coarse lead. It has a built - in lead ingot production capacity of 100,000 tons and currently produces about 6,000 tons per month. The by - products include gold, silver, tin, and zinc oxide. The operating rate is about 60%, and demand has been weak since April. It mainly imports raw materials from Jiangxi and has some pressure in raw material supply. The long - term contract ratio of primary lead is about 80%. It has a raw material inventory of about 200 tons and almost no finished product inventory. It needs a processing fee of about 1,200 yuan/ton to make a profit and does not conduct hedging [54][55]. - **Comprehensive Recycling Enterprise C**: A medium - sized comprehensive recycling enterprise with an annual lead material production capacity of 100,000 tons and a waste comprehensive recycling capacity of 180,000 tons. It currently only operates the scrap battery production line with an operating rate of 50% - 60%. The demand has been weak this year, especially in May. It sources about two - thirds of its raw materials from Hunan and one - third from Guangdong. The raw material inventory is usually less than five days, and the finished product inventory is full. The cost of secondary lead is about 800 yuan/ton, and it has been in a loss state since May. It does not allow hedging and believes that the short - term rebound of lead prices is limited but is bullish in the third quarter [56][57][58]. - **Comprehensive Recycling Enterprise D**: A comprehensive recycling enterprise engaged in the recycling of rare and precious metal resources. It has an annual material processing capacity of about 250,000 tons and an electrolytic lead production capacity of 4,000 tons per month, which may increase to 5,000 tons by the end of May. It is currently operating at half - capacity, and demand has been weak since May. It believes that downstream demand has price elasticity and expects demand to recover in the second half of the year. It mainly sources raw materials from local mining traders, domestic regions, and a small amount from imports. The long - term contract and spot sales were initially in a 50:50 ratio, but now production can only meet long - term contracts. The raw material inventory is about 2 - 3 days, and there is almost no finished product inventory. The electrolytic lead cost is about 500 yuan/ton, and the company has been profitable overall this year, with the main profit coming from by - products. It conducts hedging flexibly [63][64][66]. - **Comprehensive Recycling Enterprise E**: A small - scale comprehensive recycling enterprise integrating rare and precious metals such as gold, silver, and bismuth. It mainly recycles slag and waste from refineries, with an annual processing capacity of about 60,000 tons. It is currently operating at an operating rate of less，than 40%, and sales have been poor recently. It has no raw material inventory and has cleared its finished product inventory. The electrolytic lead cost is about 500 yuan/ton, and it has maintained a small profit since the beginning of the year. The main profit comes from by - products such as tin, bismuth, and antimony. It does not conduct hedging and mainly adjusts inventory. It believes that the decline of lead prices is limited, but the medium - term trend is unclear [71][72][74]. - **Comprehensive Recycling Enterprise F**: A medium - sized comprehensive recycling enterprise with a designed annual comprehensive recycling capacity of 145,000 tons. It is still adjusting its production structure and currently estimates a lead production capacity of 70,000 tons per year. It mainly sources raw materials from the slag of copper and lead - zinc smelters and is facing difficulties in raw material procurement. It has a one - and - a - half - month raw material inventory due to recent commissioning and is waiting to produce finished products. The electrolytic lead cost is 500 - 600 yuan/ton, and the comprehensive profit is over 500 yuan/ton, with the main profit coming from copper and tin. It does not conduct hedging currently. The heavy - metal pollution incident had little impact, but there is a problem with the disposal of water slag [79][80][81]. - **Lead Oxide Enterprise G**: A lead oxide processing enterprise mainly producing red lead and yellow lead, with a monthly output of about 2,500 tons. It is currently producing based on sales, and terminal demand is moderately weak. It was operating at full capacity during the peak season after the Chinese New Year and is currently operating at about 80% capacity. It believes that demand will not improve until at least July. It uses electrolytic lead and secondary lead as raw materials in a 50:50 ratio, with a monthly raw material procurement of more than 2,000 tons. It has no long - term contracts. The raw material inventory can meet 1 - 10 days of use, and there is almost no finished product inventory. The cost is 800 - 900 yuan/ton, and it has maintained a small profit since the beginning of the year. It does not conduct hedging. The heavy - metal pollution incident had no impact, and environmental protection - related production cuts occur about once every two months. It does not expect a significant decline in lead prices, mainly due to raw material support [85][86][87].