Under the pattern of strong domestic lead prices and weak overseas ones, lead-acid battery companies cancelled orders and shifted production [SMM Analysis]

According to customs data, the imports of lead-acid batteries in June 2024 were 447,900 units, up 12.78% MoM and 105.33% YoY. H1 imports totalled 2.7244 million units, up 89.92% YoY. The exports of lead-acid batteries in June 2024 were 23.5864 million units, down 4.04% MoM but up 4.44% YoY. H1 exports totalled 121 million units, up 4.9% YoY.

According to a survey, since June, due to different supply-demand mismatches at home and abroad, domestic lead prices ran strong and overseas ones ran weak, with the SHFE/LME price ratio expanding and the import window gradually widening. According to SMM calculations, considering a 3% import tariff, the profit of lead ingot imports reversed from nearly -1,000 yuan/mt in early June to positive, with the best period seeing import profits close to 500 yuan/mt. Since lead material is a major component of lead-acid battery production costs, the price difference between domestic and overseas lead has a direct impact on lead-acid battery imports and exports. According to lead-acid battery export enterprises, during May and June, lead prices continued to rise, with an increase of over 13% in two months, sharply raising lead-acid battery production costs. Meanwhile, the prices of overseas lead-acid battery products remained relatively stable, causing Chinese lead-acid battery products to lose their price advantage in exports, with original orders being absorbed by Southeast Asian countries, leading to a synchronous decrease in lead-acid battery exports.

Entering July, the domestic and overseas lead price trends diverged again, and lead ingot import profits climbed. As of mid-July, lead ingot import profits exceeded 500 yuan/mt; by late July, they exceeded 1,000 yuan/mt. Against this backdrop, lead-acid battery export enterprises in Guangdong, Fujian, Zhejiang, and other regions generally faced a decline in orders. Some companies chose to shift orders to their overseas factories for production, while others directly lost overseas orders, causing some lead-acid battery companies to run in a semi-operational, semi-shutdown state. It is expected that the exports of lead-acid batteries in July will further decline.