SHANGHAI, Nov. 12 (SMM) – Average operating rate at China’s major lead-acid battery producers dropped 0.24 percentage point to 61.96% in September, down slightly from the year’s high of 62.20% in August, a survey conducted by Shanghai Metals Market (SMM) showed.
Although the decline in average rate was modest, operating rate at motive battery producers fell sharply following the peak month of July, while the rate at ignition battery producers was up significantly. Overall, battery production was still largely influenced by supply and demand in the markets.
Average operating rate at motive battery producers slipped to 48.90% in September, down 4.11 percentage points from August’s 53.01%. Motive battery prices were raised three times during the ephemeral peak sales season for electric bike batteries in July, but as sales in August turned sluggish, producers were forced to cut battery prices to lower inventories despite increasing raw material prices. Producers cut motive battery prices twice in September, with prices for 48V 20AH and 48V 12AH batteries down to 520 yuan per set and 330 yuan per set, respectively, virtually identical to the levels back in early July. Small and medium producers had no choice but to cut battery prices as well. In this context, many cut output due to thin profits and poor sales, dragging down the average operating rate at motive battery producers.
Operating rates at ignition battery manufacturers averaged 67.19% in September, up 4.22 percentage points from August. Automobile sales surged in September by 15% month-on-month to 1.92 million vehicles, sparking higher demand for ignition batteries. In the battery replacement market, although real demand showed no significant improvement, battery distributors did purchase more aggressively due to bullish mood stoked by a 1,000-yuan-per-tonne rise in lead prices during August and a 3% battery price hike by Camel Group in late August. In response to strong distributor demand, ignition battery producers began ramping up production.
Orders picked up at large battery producers, including the Camel Group, Fengfan Co., Ltd., and Zhejiang Jujiang Power Supply, while small and medium producers were more cautious toward increasing output as they had been trying to reduce finished goods inventories all year.
The rate at backup battery producers hit 73.04% in September, essentially unchanged from August’s 72.92%. In China’s telecommunication industry, an increase in battery demand from China Mobile following its construction of 4G base stations has yet to materialize, while China Unicom and China Telecom were only conducting regular battery replacements at base stations. Backup battery exports have picked up noticeably this year thanks to recovery in European and US markets.