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SMM Exclusive: Analysis of Rising Lead-Acid Battery Prices Amid Plunging LME Lead Prices
May 21,2010 10:44CST
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SHANGHAI, May 21 (SMM) -- According to market sources, Zhejiang Storage Battery Association announced to raise lead-acid battery prices by 4% from May 10th on a trial basis. At present, many lead-acid battery producers have increased their own battery prices. Since LME base metal prices have represented sluggish performance in recent days, with a cumulative decline of over 20% since May 4th, higher lead-acid battery prices received little acceptance from e-bike producers. E-bike producers believed that prices of lead-acid batteries should drop along with cost reductions from falling lead prices. Whether or not rising lead-acid battery prices will be sustainable remains to be seen.

Based on a SMM survey, operating rates at lead-acid battery producers have been stable since March. Lead-acid battery producers said previous lead-acid battery prices were set based to lead prices of RMB 13,000/mt, and existing lead prices have gradually stabilized at RMB 15,000/mt, significantly squeezing their profits. They are in a dilemma of rising output, but falling production value. Lead-acid battery price increases were aimed to help them get out of the dilemma. Some people familiar with the condition said the round of price increase is a regular one, and on a mild basis.

In addition, lead-acid battery producers told SMM that price increases of lead-acid battery don't suggest explosive growth of demand for batteries, as the round of price hikes was to help them reduce losses. Overall consumption for lead remains stable. In the short term, China's refined lead will remain in surplus. It is worth noting that lead smelters are also facing a dilemma, as lead-acid battery producers are, since high-priced ore prices and sluggish lead prices have hampered their production.


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