China's secondary lead market is navigating a delicate balancing act in August 2026, as a phased rebound in futures prices has triggered localized production restarts but falls well short of catalyzing a broad-based supply recovery, according to analysis published on August 11 by Shanghai Metals Market (SMM). SMM production schedule data reveals that in July, the total month-on-month impact volume of refined lead from China's secondary lead enterprises stood at -16,800 metric tons. The majority of smelters proactively curtailed output under the dual pressures of market-wide losses and raw material shortages, pushing the industry's monthly operating rate down to 29.81%, a level significantly below that recorded in the same period of prior years.
August production schedules are under even greater strain, with the month-on-month impact volume of refined lead reaching -22,300 metric tons. Enterprises had broadly adopted a pessimistic outlook on future market conditions, making maintenance shutdowns and low-load operations the prevailing mode. Many smelters that had originally planned to resume production have postponed those decisions to September.
The recent phased rebound in lead futures has nonetheless had some discernible effects on smelter sentiment. Secondary refined lead prices have tracked the upward move, and producer losses have narrowed to some degree. A divergence in production behavior has emerged as a result: a number of smelters in East China, encouraged by improving margins, have signaled a willingness to ramp up output, while certain operators in North China have broken from their original schedules and opted to resume production early using smaller furnaces.
However, the industry as a whole remains deeply in negative earnings territory, with small and medium-sized facilities continuing to absorb relatively large losses. No widespread wave of production restarts has yet materialized, according to SMM. On the raw materials side, the price of waste electric bicycle batteries retreated to 9,175 yuan per metric ton, providing some relief on the cost front.
Despite this pullback, scrap battery recycling supply has not increased materially, continuing to constrain overall output capacity across the sector. A regional breakdown of production schedules highlights notable divergence. East China, the country's primary hub for secondary lead production, shows a split picture in which only a limited number of enterprises plan to scale up operations while the majority remain shut down or running at reduced loads.
In Central and North China, most furnace revivals and production resumptions remain concentrated toward the end of August and into September, capping overall output growth for the current month. Enterprise production decisions are described by SMM as highly anchored to prevailing lead prices and the timing of raw material deliveries. On the demand side, the lead-acid battery industry is in its traditional seasonal lull, with downstream procurement remaining cautious and offering little impetus for a price recovery.
SMM notes that the current round of lead price appreciation has been driven primarily by supply contraction in the primary sector and by speculative short-sellers closing positions ahead of contract delivery, rather than by any concurrent recovery in end-use consumption. In summary, SMM concludes that overall secondary lead supply in August will remain at depressed levels. While the narrowing of losses has prompted localized production ramp-ups and some early restarts, this does not yet constitute a full supply recovery.
Whether output can stage a meaningful rebound in subsequent months will depend on the sustainability of the lead price recovery, the volume of scrap battery recycling coming to market, and the pace of recovery in downstream battery demand. The materialization of production resumptions forecast for September remains, according to SMM, uncertain. Source: Shanghai Metals Market (SMM), published August 11, 2026.
Data disclosed in this report are processed by SMM based on publicly available information, market communication, and SMM's internal database models, and are presented for reference purposes only.
Source: news.metal.com