June 18, 2020: News that the Chinese auto sector was recovering better than expected should give hope to lead battery makers in the country, whose production rate stayed at just over 60% of average capacity for a second consecutive week, the Shanghai Metals Market reported on June 12.
Media reports quoted Shi Jianhua, deputy secretary general of the China Association of Automobile Manufacturers on June 11, as saying car sales were up by double digits in May, on top of a rebound in April.
Shi said the month’s sales were 14.5% up on a year ago, far exceeding expectations, with April’s increase of 4.4% over April 2019 ending 21 months of declining sales.
“As long as there isn’t a second wave of Covid-19 cases in autumn and winter, China’s auto market will keep doing well,” Shi was quoted as saying, although he warned that the authorities would need to put policies in place to improve consumer confidence.
For the first quarter of 2020, sales were down by 42% on Q1 2019, he said, which was the worst quarter in Chinese history for the auto market.
The news should cheer up battery makers, whose operating rates have slowed considerably since the coronavirus crisis, with the SMM reporting drops across lead-acid battery producers in Jiangsu, Zhejiang, Jiangxi, Hubei and Hebei provinces for the second straight week as of June 12.
In fact the second week was marginally down on the first week of June, falling a further 0.18% to 63.42% of capacity, the SMM said.
“It is understood that end-users’ demand for lead-acid batteries remains subdued,” said the report. “Producers of electric bicycle batteries and auto batteries extended promotions for finished products or scaled back operations, so as to clear in-plant inventories.
“In Jiangsu and Zhejiang provinces, where a slew of e-bike battery enterprises are located, sluggish end-users’ consumption, cautious purchases by distributors and producers cash-in inclination in the middle of the year prompted local battery mills to control inventories and cut operating rates.”
In lead batteries for energy storage, the SMM said operating rates were relatively higher as exports resumed to overseas customers.
Globally, growing demand for electric and hybrid electric vehicles would spur a rise in market value for the lead-acid battery sector to $54.4 billion by 2026, registering a CAGR of 4.3% by then, according to Data Bridge Market Research.
Advances in manufacturing processes would act as a driver to the market, it said.