China’s secondary lead industry is currently under dual pressure: severe overcapacity and a shortage of raw materials. This situation is largely the result of excessively rapid capacity expansion in recent years, while the collection system for spent lead batteries and other lead-containing waste has not yet been fully developed. However, in the next three to five years, as the recycling system improves and the pace of capacity growth slows, the supply-demand imbalance for lead-containing waste is expected to ease.

 

I. Current Status of Overcapacity in Secondary Lead

 

1. Severe Overcapacity

By 2024, the total production capacity of China’s lead industry had reached 11.828 million tons, with secondary lead capacity accounting for 57.6% (around 6.81 million tons). However, the raw material processing capacity of secondary lead companies (scrap lead-acid battery processing capacity) has reached 14.5974 million tons per year, forming a significant gap with the actual raw material supply.

 

Raw material shortage is substantial: secondary lead feedstock is highly concentrated (98% depends on spent lead-acid batteries), while the shortfall in scrap lead-acid batteries exceeds 7 million tons. This has led to fierce competition for raw materials, driving up costs.

 

2. Low Operating Rates

In 2024, the average operating rate of the secondary lead industry dropped to below 35%—a record low—due to raw material shortages, leaving a large amount of capacity idle.

 

3. Profitability Challenges

With capacity expansion and competition for feedstock, industry profit margins have been shrinking year by year. Under normal conditions, secondary lead producers could maintain profits of around 300 RMB per ton. In recent years, this has declined to 50–150 RMB per ton, with losses occurring during some periods.

 

II. Factors Easing the Supply-Demand Imbalance for Lead-Containing Waste in the Next 3–5 Years

 

1. Slower Capacity Expansion

Data show that new planned secondary lead capacity in 2024 is expected to be 520,000 tons, compared with 1.6 million tons in 2022 and 1.69 million tons in 2023. This indicates a clear slowdown in project commissioning, showing the industry’s expansion momentum is weakening and becoming more rational.

 

2. Policy-Driven Industry Consolidation

At the national level, attention has already turned to addressing the “involution-style” competition problem. The Ministry of Industry and Information Technology has issued an action plan for the stable growth of industries including nonferrous metals, promoting “structural adjustment, supply optimization, and elimination of outdated capacity” to advance high-quality development. This will accelerate the exit of small, inefficient, and environmentally noncompliant producers, reducing irrational competition for feedstock.

 

3. Structural Changes on the Demand Side

About 85% of lead consumption depends on lead-acid batteries, but this sector is facing substitution pressures from lithium-ion and sodium-ion batteries. In the new energy vehicle market, lithium-ion batteries dominate; in the electric two-wheeler market, the shift toward lithium is accelerating; in energy storage, sodium-ion and other new technologies are becoming competitive.

 

While lead-acid batteries still maintain a substantial market, long-term consumption growth faces pressure, which could gradually reduce demand-side stress on secondary lead feedstock.

 

4. Gradual Improvement of the Collection System

With the rollout of policies such as improvements to the national VAT policy on comprehensive resource utilization, the scrap lead-acid battery recycling market is becoming increasingly structured. Lead-acid battery manufacturers and primary lead producers are progressively entering the secondary lead sector, promoting the formation of a closed-loop industry cycle, which will help optimize raw material collection and distribution efficiency.

 

III. Industry Outlook

 

1. Higher Industry Concentration

Over the next three to five years, under the combined effects of policy guidance and market forces, the secondary lead industry is expected to undergo reshuffling and consolidation. Smaller, less competitive firms will be eliminated, while leading companies with advantages in scale, technology, environmental compliance, and supply-chain collaboration (such as Tianneng and Yuguang Gold & Lead) are likely to gain greater market share, raising industry concentration.

 

2. Integrated Supply Chains

The traditional “lead-acid battery production–consumption–collection–recycling” cycle will deepen further. More battery producers are expected to expand upstream into lead recycling to secure raw material supply and implement extended producer responsibility. This “integrated supply chain” model will help stabilize feedstock supply and reduce disorderly competition.

 

3. Technological Upgrades and Efficiency Improvements

To survive and grow amid fierce competition, secondary lead enterprises will place greater emphasis on technological advancement—for example, the adoption of advanced smelting technologies, enhanced automation and digitalization, reduced energy consumption, and improved metal recovery and resource utilization rates. These measures will not only improve efficiency but also help ease excessive dependence on raw materials.

 

 

(IRuniverse Zhao)

 

 

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