China Shuts Most Lead-Acid Battery Producers to Curb Pollution, Poisoning

Battery makers in China, the largest lead user and producer, have shut factories in major producing regions after the government tightened measures to curb pollution, an industry executive said today.

Plants in Zhejiang, Guangdong, Sichuan and Henan provinces have suspended production for about two weeks, said Xu Hong, head of the lead-acid battery branch at the China Electrical Equipment Industry Association. The Ministry of Environmental Protection ordered local governments on May 18 to tighten management of battery units and recycled lead producers following incidents of poisoning from so-called heavy metals.

The closures may damp lead demand in the world’s largest exporter of the storage batteries used from mobile phones to electric bicycles and cool a 36 percent rally in the prices of the metal in the past year on the London Metal Exchange. The battery makers including Tianneng Power International Ltd. (819) and Chaowei Power Holdings Ltd. (951) represent about 80 percent of the country’s total lead demand, according to the China Nonferrous Metals Industry Association.

“This is definitely going to curb lead demand in the next couple of months, and we’ll need to wait till later this year to see if demand can come back,” said Shi Lei, an analyst at Cofco Futures Co. “Domestic lead prices will be capped in coming months as a result of demand losses.”

Lead consumption in China may increase 8 percent this year to 4.05 million metric tons, compared with a growth of 11 percent in 2010, Zhang Shu, a lead analyst at data provider SMM Information & Technology Co., said at a conference on May 27.

Poisoning Incidents

China’s environmental ministry ordered tight controls of lead-acid battery units as well as recycled lead producers after reports of poisoning incidents in Zhejiang and Guangdong provinces. The country will prioritize environmental checks as part of a crackdown to curb pollution from so-called heavy metals, the ministry said in a statement on March 29.

The legal representative of Zhejiang Haijiu Battery Co. was detained on May 16 after more than 300 people near a plant were found to have elevated levels of lead in their blood, the official Xinhua news agency reported, citing a local government spokesman. Eight officials from the local government, the environmental protection bureau and the health bureau are being investigated as lax supervision has also been blamed for the poisonings, the agency reported.

Zhejiang and Guangdong provinces are the two biggest battery-producing regions, accounting for 36 percent of the country’s total, according to data provider SMM Information & Technology Co.

‘No Timetable’

“Regardless of the plants’ conditions, they’ve all been shut down, and there is no timetable now to resume operations,” China electrical equipment association’s Xu said.

The closures have reduced the volume of lead traded in the cash market, according in Cofco’s Shi.

Lead traded on Changjiang Nonferrous Metals Market, Shanghai’s largest spot metals market, traded at 16,359 yuan ($2,522) a ton. Lead for September delivery on the Shanghai Futures Exchange closed the morning session 0.7 percent lower at 17,195 yuan a ton. Three-month lead traded on the London Metal Exchange climbed 0.6 percent to $2,505 a ton on May 27.

--Helen Sun. Editors: Thomas Kutty Abraham, Jarrett Banks

To contact the Bloomberg News staff on this story: Helen Sun in Shanghai at hsun30@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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