China does look like restarting manufacturing activity. Hubei is stirring back to life and people are starting to make stuff and consume stuff again. A lot of lead consumption will be demand deferral rather than demand destruction, as it’ll just delay the use rather than blow it out altogether.
We’re forecasting a dip in demand this year, but followed by a bounce-back next year above our previous prediction due to demand deferral. Replacement batteries will be needed, just a little later than expected due to people staying at home and not driving the miles. But batteries sitting idle not being used, not charging, will suffer and fail prematurely, although temperatures aren’t going to be a big factor because we’re not in the depth of winter or height of summer to make things worse.
OE batteries are obviously suffering whilst the auto plants are stalled, and there is likely to be some reluctance from many prospective buyers about investing in a new car when they’re fearing over job security and are generally less flushed with cash. That’s a bit of demand destruction right there, but on the flipside, they’re going to keep the old banger running and will have to replace the battery in that, rather than swapping it for a new set of wheels.
Industrial batteries could suffer, especially those linked to investment – new standby power for offices, data centres and other big facilities, additional mechanical handling kit, etc. Fewer goods being traded means fewer forklift trucks, cranes, etc. And less cash coming into warehouse owners means they’ll be less able to invest in that planned new fleet of forklift trucks or replace the ageing batteries in the current fleet. They’ll just eek them out a bit longer until they feel they’re back on an even keel.
The roll-out of big project stuff is bound to suffer, like renewable power generation (and the batteries to go with it), if governments are impecunious after all the emergency spending they’re doing. It feels like a big economic slowdown coming – and don’t even mention Brexit!
There seems to be variability in folk operating or not operating lead smelters and battery plants at the moment, but there are bound to be restrictions on scrap battery and lead concentrate movements. Scrap’s going to be tight if batteries aren’t being junked right now and people aren’t out collecting them. Concentrate is arriving at ports but have you got the drivers to transport it to the smelters? Same for finished batteries. It’s all so uncertain.