Average Operating Rate at Chinese Lead-Acid Battery Makers Falls to 47.11% in Feb.

SHANGHAI, Mar. 25 (SMM) – Average operating rate at major Chinese lead-acid battery producers fell to 47.11% in February, due mainly to depressed consumption, a recent SMM survey showed.

SMM surveyed 91 Chinese lead-acid battery producers and found their average operating rate fell 7.45 percentage points in February from January’s average of 54.56%.

A majority of battery producers did not restart production until after the Lantern Festival on February 14, and when combined with the lack of available workers, caused operating rates to fall. However, SMM believed the lower rate was more a result of sluggish demand.

February’s average operating rate at engine start-up battery producers fell to 51.6%, down 9.2 percentage points from January’s average of 60.8%. Data from the China Battery Industry Association showed automobile output in China totaled 1.63 million units in February, down 21% on the month, while motorcycle output fell 20.32% to 1.38 million units. High finished goods inventories also left little incentive for lead-acid battery producers to maintain production.

During the same period, average operating rate at motive power battery producers dropped to a new low of 37.68%, down 4.15 percentage points from January’s 41.83%. The motive power battery sector continued to suffer from overcapacity since large producers proceeded with build-out plans, but falling margins or even losses caused by price wars are gradually forcing SMEs out of the market. Producers lowered 12AH and 20AH lead-acid battery prices by 10 yuan per unit in mid-February to boost sales during the low demand season, and the resultant smaller price gap between leading and inferior brands took an exceptionally heavy toll on SMEs, severely affecting their output.

Average rate at backup battery producers fell the most of all battery categories, down by 9.83 percentage points in February to 54.41%, but rates at battery producers which were awarded contracts for new 4G base station batteries were relatively high. In addition, the steady economic recovery in Europe and the US, together with unusually severe winter weather during January and February in the US boosted demand for Chinese batteries.

Motive power and engine start-up battery producers reported consumption in March was weaker than a year ago. Most medium and large producers managed to keep operating rates at around 70%, but tight liquidity moved to the forefront as finished goods inventories grew. Small producers were able to cut output more easily.