SHANGHAI, Apr. 9 (SMM) – According to the latest SMM survey, the average operating rate during February at domestic lead-acid battery producers was down 16.67 percentage points MoM to 42.18%. If the holiday factor is excluded, weak downstream demand was the major factor behind lower rates at battery producers.
The average operating rate at ignition battery producers reported the biggest decline, falling in February by 23.58 percentage points to 41.92%. New orders for ignition batteries fell sharply during February as automobile and motorcycle output plunged by 31.42% and 26% MoM, respectively, to 1.34 million and 1.43 million units. In addition, continuously falling lead prices caused battery distributors to limit stocks, which increased stocks at battery producers, who then cut production and lowered prices to resolve the problem. Labor shortages immediately following the Chinese New Year holiday was another factor limiting battery production.
Operating rates at motive battery producers averaged 35.87% during February, down from January’s 48.34%. Motive producers also reported limited downstream orders and labor shortages, but most of these producers also reported lower operating rates in January. Some large motive battery producers saw an improvement in orders following the Chinese New Year holiday, so in general, the decline in the average operating rate at motive battery producers was less than the decline at ignition battery producers.
Backup battery producers kept the average operating rate high at 50.87%, but the average was still down from January’s 64.19%. Orders for backup batteries in domestic markets varied by producer, but exports fell across the board. Some producers reported overseas buyers were unwilling to purchase given falling lead prices and since they know export prices for lead-acid batteries are related to domestic spot lead prices in China.