September 12, 2024: The chairman of Leoch International has said demand for the group’s lead batteries continues to be robust — but warned geopolitical tensions and other challenges are affecting lead availability and pricing.
Dong Li said in Leoch’s interim half-year results released on August 23 that escalating shipping costs due to conflicts in the Red Sea are also a challenge, together with supplies of raw materials, particularly lead.
Geopolitical tensions and mining restrictions have further impacted lead availability and the supply chain, which can potentially affect our business, he said.
Meanwhile, the appreciation of the Chinese renminbi against the US dollar compared to 2023 has also, to a large extent, hurt profitability due to increased international dollar-denominated activities.
However, he said the group maintains a “cautiously optimistic outlook on business and industry development, and will closely monitor market dynamics and industry conditions… and flexibly adjust operating strategy in a timely manner”.
Robust demand for lead batteries continues to be driven by sectors such as automotive, energy storage, and industrial applications, he said.
As the major revenue contributor to the group, the reserve power battery business accounted for nearly 42% of total sales in the first half amounting to Rmb3.1 billion ($436 million) compared to Rmb2.9 billion in the corresponding period last year.
The demand for lead acid batteries in UPS applications is expected to grow significantly as the global dependence on digital infrastructure expands, the chairman said.
Sales revenue from the recycled lead business amounted to Rmb744 million during the period (compared to Rmb996.5 million previously).
He said the recycled lead business had encountered intense competition and numerous challenges driven by increasing environmental regulations and market dynamics.
“The profitability of lead acid battery recycling is closely tied to the price of lead, and volatile global lead prices in recent months has taken a toll on our margin.”
Moving forward, the group will continue to devote itself to the R&D of new batteries, including lithium, lead-carbon and sodium ion batteries, and increase its investment in supporting software systems, he said.
Leoch also continues to fully integrate two China-based lead battery firms in which it acquired controlling stakes in 2023 from GS Yuasa.
The group signed an agreement on July 25 2023 to acquire a 70% stake in Tianjin GS Battery (TJGS) and Yuasa Battery Shunde (YBSD), with options to acquire an additional 10% in both at a later date.
