June 29 (Bloomberg) -- Lead-acid battery production in China’s Zhejiang province, which accounts for one-fifth of the country’s output, will be slow to recover amid tough pollution curbs, keeping demand for the metal low.
“Only a small proportion of producers, 10 to 15 percent, meet government environmental standards,” Yao Lingchun, secretary general of the Zhejiang Storage Battery Industry Association, said by phone. “Their combined capacity is unlikely to exceed 20 to 30 percent of the province’s total.” The industry accounts for about 80 percent of total lead use.
A slow recovery will curb demand for lead in China, the world’s largest producer and exporter of batteries made with the metal, and damp a 51 percent gain in London prices over the past year. Output of the metal has tumbled 23 percent from a record in November amid high stockpiles. Battery plants and recyclers in Zhejiang, Guangdong, Sichuan and Henan provinces suspended production from mid-May after hundreds were poisoned.
“Many big manufacturers fail to meet the environmental standards of maintaining a 500 meter safety zone around the plant, while smaller operations meet the requirement and can resume production,” Yao said.
Zhejiang Narada Power Source Co. said its unit in Ling’an has resumed production on a three-month trial basis, while another unit in Yuhang remained closed as it doesn’t meet requirements, according to a June 24 statement to the Shenzhen Stock Exchange. The company had suspended production for more than a month, the statement said.
“A few small battery makers resuming production in Zhejiang and Guangdong provinces won’t help to boost the demand for lead in the short-term,” said Xiang Yu, an analyst at Shanghai CIFCO Futures Co.
Zhejiang accounts for 32 percent of China’s total production, while Guangdong, the second-largest producing region, accounts for 13 percent, according to metals data provider SMM Information and Technology Co.
Three-month lead on the London Metal Exchange gained 0.2 percent to $2,590 a ton at 4:14 p.m. in Shanghai.
Production of refined lead dropped 13 percent last month from April to 345,000 tons, down from a record 448,000 tons in November, according to the statistics bureau.
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