SHANGHAI, Jan. 29 (SMM) – The latest SMM survey revealed the average operating rate at domestic lead-acid battery producers rose 2.29 percentage points during December, with the average rate at ignition, motive and backup battery producers up by 0.73 percentage point, 3.23 percentage points, and 2.68 percentage points MoM, respectively, and signals a rebound from the previous continuous decline in rates.
The uptick in operating rates at lead-acid battery producers was mainly driven by improvements in China’s economy. HSBC’s Manufacturing PMI for China during December grew to 51.5, up from 50.5 in November and the largest gain since May 2011. In addition, new orders in manufacturing sectors were up and growth in industrial added value at large enterprises accelerated to 10.3% YoY, up sharply from the 0.87% YoY growth in November.
Operating rates at ignition lead-acid battery producers in December averaged 63.55%, up 0.73 percentage point MoM. Although operating rates rose for a second straight month due to the traditional high demand season, producers still reported poor orders during December.
Low temperatures during December accelerated replacement of ignition batteries, but increases in output at Chinese automobile and motorcycle manufacturers also pushed up demand for ignition batteries. Data from the China Association of Automobile Manufacturers showed automobile and motorcycle output grew during December by 1.34% and 4% MoM, respectively, to hit 1.78 million and 2.1 million vehicles, and with motorcycle output reaching a high for 2012. In addition, the decline in Japanese car sales which began in 3Q due to Sino-Japanese political tensions began to turn around, increasing demand for batteries from Japanese vehicle manufacturers.
The average operating rate at motive lead-acid battery producers hit 50.25% in December, up 3.23 percentage points MoM from November’s 47.02%, and the first increase since July 2012. Only three of the 36 motive battery producers surveyed by SMM reported a decline in operating rates during December, with many producers attributing the higher operating rates to purchases by traders, but also reported that replenishment by traders still lagged behind levels over the same period of the past few years. Furthermore, Tianneng Power and Chaowei Power, China’s two leading battery producers, offered discounts to distributors in December in order to achieve sales goals, which spurred distributors to stock goods and drove up operating rates at the two companies, as well as related companies.
The Shanghai/LME lead price ratio fell during December, helping boost backup battery exports and push up the average operating rate at backup battery producers by 2.68 percentage points to hit 65.46%. According to China Customs, China exported 12.43 million backup batteries during December, up 35% MoM, as oversea buyers also replenished stocks before the Chinese New Year holiday. In China, backup battery orders increased during 4Q due to purchases by banks, the government, and major mobile phone operators.