Lead-Acid Battery Exports Declined in June-July; Focus on SHFE/LME Price Ratio Correction [SMM Analysis]

According to customs data, the import volume of lead-acid batteries in July 2024 was 480,800 units, up 7.33% MoM and 130.12% YoY. From January to July 2024, the cumulative import volume of lead-acid batteries was 3.2052 million units, up 95.03% YoY.

The export volume of lead-acid batteries in July 2024 was 22.1259 million units, down 6.19% MoM and up 4.45% YoY. From January to July 2024, the cumulative export volume of lead-acid batteries was 143 million units, up 4.87% YoY.

According to the survey, since June, due to varying supply-demand mismatches domestically and internationally, SHFE lead underperformed LME nickel, with the SHFE/LME lead price ratio widening and the import window gradually expanding. According to SMM calculations, considering a 3% import tariff, the profit/loss of lead ingot imports reversed from a loss of nearly 1,000 yuan/mt in early June to a profit, with the best period seeing import profits close to 500 yuan/mt. As lead materials are a major component of lead-acid battery production costs, the price difference between domestic and international lead prices has a direct impact on the import and export of lead-acid batteries. Export-oriented lead-acid battery companies reported that during May-June, lead prices continued to rise, with a two-month increase of over 13%, sharply raising production costs. Meanwhile, the prices of overseas lead-acid battery products remained relatively stable, eroding the export price advantage of Chinese lead-acid battery products, with battery orders originally belonging to China being absorbed by Southeast Asian countries, leading to a simultaneous decrease in lead-acid battery export volumes.

The survey indicated that in July, the domestic lead market's supply issues intensified. With lead prices surging, the most-traded SHFE lead contract reached a high of 20,050 yuan/mt, setting a new high since July 4, 2018. In contrast, the overseas market did not face significant supply issues, with LME lead inventories once rising to a high of 250,000 mt. The differing supply issues between domestic and international markets led to a pattern of SHFE lead underperforming LME lead, further widening the SHFE/LME lead price ratio and simultaneously expanding the export losses of lead-related products, causing lead-acid battery export volumes to decline again after the drop in June. Conversely, due to cost advantages, domestic automotive companies and others increased their procurement of overseas lead-acid batteries, with import volumes continuing to rise MoM, including a significant 33.14% MoM increase in the import volume of ignition lead-acid batteries in July.

By country, Vietnam was the largest source of lead-acid battery imports, accounting for 80% of the total import volume. July imports from Vietnam rose by 7.33% MoM, mainly consisting of energy storage batteries (used in telecom, UPS, etc.). Additionally, automotive battery imports also increased significantly, with notable increases from Germany, Japan, South Korea, and Thailand. On the export side, lead-acid battery exports to Indonesia, Malaysia, the US, Mexico, and Germany saw significant declines. Export-oriented lead-acid battery companies in Zhejiang, Guangdong, and other regions reported that the divergence in domestic and international lead price trends in June-July led to rising domestic battery costs, while overseas lead price increases were much smaller, resulting in a significant loss of overseas battery orders to countries like South Korea, Malaysia, and Turkey. Due to insufficient orders, export-oriented companies generally entered a state of reduced production in July-August, with production cuts of 50-70% or frequent holidays, such as working three days and resting four days.