Operating rates of lead-acid battery plants to dip in Nov

SHANGHAI, Nov 16 (SMM) – SMM expects operating rates of lead-acid battery plants to dip 1-2 percentage points month on month in November. Rates will vary between small-, medium-sized plants and top brand producers. While weaker demand lowered operating rates across small and medium mills, purchases from distributors kept leading battery producers operating at highs. These distributors had annual sales targets to meet. 

In October, operating rates jumped 2.61 percentage points on the month as producers stepped up operation during the week-long National Day holiday to fulfil backlogged orders for September. As distributors stockpiled in September, equipment issues and labour shortages at some battery mills resulted in unfulfilled orders. 

Slower demand was seen in the downstream electric bicycle and automobile sectors in October, and this capped the month-on-month growth of operating rates. 

On a yearly basis, the rate surged 10.53 percentage from a low base in October 2017. 

In October 2017, lower prices of lead grew market pessimism and deterred distributors from purchasing. This lowered orders across lead-acid battery plants. The average price of SMM #1 lead plunged from a year-high of 21,850 yuan/mt at the start of October to 18,625 yuan/mt at the end of the month. 

As the traditional low season set in during October last year, operating rates fell across lead-acid battery producers. Those producers cut production sharply or closed for 10-20 days. The market mainly depleted inventories at distributors, who stockpiled in a rising market in September 2017.