China Lead-Acid Battery Market StudyChina will put lead-acid battery consumption tax into effect in...
Transcript of China Lead-Acid Battery Market StudyChina will put lead-acid battery consumption tax into effect in...
China Lead-Acid Battery Market StudyLead & zinc team at SMM
Oct. 2015
Number(and(Capacity(of(Lead-acid(Battery(Producers(
Number(and(Capacity(of(Lead-acid(Battery(Producers(
1.5
2
2.5
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3.5
1000
1500
2000
2500
3000
Unit: 100 million kvahNumber of producers
© SMM. All rights reserved.
� Recent years have seen dramatic changes in the number and capacity of lead-acid battery producers.
� The number and capacity of lead-acid battery producers surged during 2005-2010, but most producers were small-scaled ones during the period. China issued the Lead-Acid Battery Industry Entrance Requirements (short as Entrance Requirements) during 2010-2015, which sets thresholds for entry into the industry. The number of producers unqualified under the Entrance Requirements shrank significantly, while qualified producers expanded capacity aggressively.
0
0.5
1
0
500
1000
2005 2010 2015E 2020E
Number of producers Capacity
2
Source: SMM
Changes(in(Company(Scale(2005-2015E
Lead-acid(Battery((Output(and(Share(by(Type(
60%30%
10%
2005
70%
24%
6%
2010
70%
20%
10%
2015E
© SMM. All rights reserved.
� Under the Entrance Requirements, annual capacity for existing lead-acid battery producers must ≥ 200,000 kvah, and annual capacity for new lead-acid battery producers must ≥ 500,000 kvah, and annual capacity for existing polar plate producers that produce polar plate for sale must ≥1 million kvah. In 2012, lead-acid battery producers whose annual capacity were less than 200,000 kvah took up 71% of total lead-acid battery capacity.
� Capacity at lead-acid battery producers expanded gradually after the Entrance Requirements took effect. The definitions of small, medium and large producers changed dramatically during 2005-2015.
Source: SMM
3
small companymedium company large company
small companymedium company large company
small companymedium company large company
Definition 2005 2010 2015ESmall <100,000 <200,000 <1000,000Medium 100,000-200,000 200,000-500,000 1000,000-5000,000large >200,000 >500,000 >5000,000Unit: kvah
Lead-acid(Battery((Output(and(Share(by(Type(
Lead-acid(Battery((Output(and(Share(by(Type(2005-2020E
40%
60%
80%
100%
0.64
0.96
1.28
1.6
Unit: 100 million kvah
© SMM. All rights reserved.
� Lead-acid battery capacity expanded rapidly over the past decade or so, leading to overcapacity and negative impact. Motive lead-acid battery –40% of total lead-acid battery capacity – is affected the most. Lead-acid battery production growth is likely to continue slowing down in coming five years or even enter negative territory.
Source: SMM
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0%
20%
0
0.32
2005 2010 2015E 2020E
Lead-acid battery output Ignition type Motive type Backup type Growth rate
Lead-acid(Battery(Capacity(Distribution
Lead-acid(Battery(Capacity(Distribution
Jiangsu
Shandong
Anhui
Hebei
Henan
Zhejiang
Hebei
Hubei
Jiangsu
Anhui
© SMM. All rights reserved.
� Lead-acid battery capacity is shifting from east China to central part of the country in recent years due to various factors. Hebei, Hubei and Anhui have become major lead-acid battery producing regions.
� Zhejiang, Hebei, Hubei, Jiangsu and Anhui were China’s top five lead-acid battery producing regions in H1 2015.
5
Fujian
ZhejiangHubei Anhui
Guangdong
Guangdong
Henan
Fujian
Shandong
Source: SMM
Qualified(Lead-acid(Battery(Producers
Producers(Qualified(for(Lead-Acid(Battery(Industry(Entrance(Requirements
100
200
300
400
500
Unit: 10,000 kvah
© SMM. All rights reserved.
Currently, 27 producers are qualified for the Entrance Requirements, whose polar plate capacity is 43.95 million kvah and assembly capacity is 38.29 million kvah.
Source: SMM
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0
100
6 producers in Zhejiang
6 producers in Jiangsu
2 producers in Anhui
4 producers in Jiangxi
2 producers in
Guangdong
3 producers in Hebei
2 producers in Henan
1 producers in Guangxi
1 producers in Hubei
Lead-acid(Battery(Outdated(Capacity(Elimination
Time List Number(of(producers
Capacity( 10,000 kvah
Polar plate Assembly(
Jul.(11,(2012 1st( 92 1541.195 1495.975
Sept.(7,(2012 2nd( 22 126.4 94.94
Jul.(18,(2013 1st 44 779.92 816.89
Lead-acid(Battery(Capacity(Elimination
Lead-acid(Battery(Producers(Required(to(Eliminate(Outdated(Capacity(
© SMM. All rights reserved.
Jul.(18,(2013 1st 44 779.92 816.89
Sept.(9,(2013 3rd 11 629 311
Jul. 8,(2014 1st 39 848 531
Aug.(12,(2014 2nd 17 970 566.7
� During 2012-2014, the Ministry of Industry & Information Technology (MIIT) released six lists of lead-acid battery producers required to eliminate outdated capacity. These lists target 225 producers, involving polar plate capacity at 48.945 million kvah and assembly capacity at 38.16 million kvah.
Sources: SMM, MIIT
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Lead-acid(Battery(Cost(Structure(
Motive(Lead-acid(Battery(Cost(Structure Traditional(Battery(Production(Process( 12V-12AH
20
40
60
80
100
Unit: RMB/piece
© SMM. All rights reserved.
� Lead-acid battery contains about 70% of lead. As such, changes in lead prices could have significant impact on lead-acid battery costs. Excluding unusual factors, battery sales prices change correspondingly once changes in spot lead prices exceed RMB 1,000/mt.
� The Entrance Requirements bans use of traditional battery production process for newly built, upgraded and expanded projects, effective January 1, 2013.
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Source: SMM
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20
总成本 铅及铅合金 辅料 能耗 人工 售后 其他成本
LaborSupplementary materials
Total cost OthersEnergy After-sales service
Lead & lead alloy
Lead-acid(Battery(Cost(Structure(
Motive(Lead-acid(Battery(Cost(Structure( Enclosed(Battery(Formation(Process( 12V-12AH
Lead-calcium(alloy Rare(earth(alloy(Unit: RMB/piece
Energy
Labor
After-sales service
Others
© SMM. All rights reserved.
� Enclosed battery formation process, also called cadmium-free enclosed battery formation process, operates in such a way that battery polar plate is solidified and dried before being cut into pieces for assembly and charging is completed in the final stage.
� Compared with traditional process, cadmium-free enclosed battery formation process uses 90% less water and 25.8% less electricity, reduces costs by 15% and occupational disease by 90%. Enclosed battery formation process conforms to the entrance requirements and is environmentally friendly as it adopts lead-calcium alloy, unlike traditional process that uses cadmium and arsenic.
-100 -80 -60 -40 -20 0 0 20 40 60 80 100Source: SMM
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Lead & lead alloy
Total cost
Supplementary materials
Energy
Lead-acid(Battery(Cost(Structure(
Automotive((Ignition(Battery(Cost(Structure(100AH
Dry(charged( Maintenance-free(Unit: RMB/piece
Energy
Labor
After-sales service
Others
© SMM. All rights reserved.
-400 -300 -200 -100 0 0 100 200 300 400
� The Entrance Requirements bans new, upgrade and expansion projects for dry charged lead-acid batteries, namely lead-acid batteries which are filled with electrolyte only before use and whose polar plates are dry and in state of charge.
� Major battery manufacturers, such as Fengfan Co. and Camel Group no longer produce such batteries.
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Source: SMM
Lead & lead alloy
Total cost
Supplementary materials
Energy
Motorcycle(Ignition(Battery(Cost(Structure(7AH
Lead-acid(Battery(Cost(Structure(
Dry(charged( Maintenance-free(Unit: RMB/piece
Energy
Labor
After-sales service
Others
© SMM. All rights reserved.
� The Entrance Requirements bans open-type lead-acid battery acid projects, i.e. battery that emits SO2 into the air when in use.
-100 -80 -60 -40 -20 0 0 20 40 60 80 100
12
Source: SMM
Lead & lead alloy
Total cost
Supplementary materials
Energy
Lead-acid(Battery(End(Use Electric(Bicycle((E-Bike)
E-Bike(Ownership(
E-Bike(Ownership(1 2
Company(Capacity(
10,000(kvah
Expansion(plans(
TiannengGroup(
Unit: 10,000 e-bikes Unit: 10,000 kvah
Capacity(and(Expansion(Plans(at(Major(E-Bike(Lead-Acid(Battery(Producers
20
25
20
25
© SMM. All rights reserved.
TiannengGroup(
ChilweeGroup
A
B
C
D
E-bike production and sales recorded negative growth for the first time in 2014 after years of rapid growth.
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Source: SMM
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5
10
15
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15
2005 2010 2015E 2020EE-bike output E-bike ownershipLead-acid battery demand
Lead-acid(Battery(End(Use Automobile(
Automobile(Ownership(
Automobile(Ownership(1Capacity(and(Expansion(Plans(at(Major(Automotive(Lead-Acid(Battery(Producers(2
Company(Capacity(
10,000(kvah
Expansion(plans(
Fengfan Co.15
20
25
15
20
25
Unit: 10,000 automobiles Unit: 10,000 kvah
© SMM. All rights reserved.
Fengfan Co.
Camel(Group
A
B
C
D
Traditional automobile market slowed. China had reported declines in month-on-month and year-on-year growth of its automobile production and sales for three consecutive months since May 2015. China’s automobile production and sales registered less than 1% YoY growth January-July, well below 3% growth forecasted for the entire year of 2015.
14Source: SMM
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2005 2010 2015E 2020EAutomobile outputAutomobile ownershipLead-acid battery demand
Lead-acid(Battery(End(Use Motorcycle(
Motorcycle(Ownership(
Motorcycle(Ownership(Capacity(and(Expansion(Plans(at(Major(Motorcycle(Lead-Acid(Battery(Producers
Company(Capacity(
10,000(kvah
Expansion(plans(
Guangdong(Dynavolt
1 2
Unit: 10,000 motorcycles Unit: 10,000 kvah
15
20
25
15
20
25
© SMM. All rights reserved.
DynavoltPower(
Technology(Co.
Tinjin Yuasa(Batterise Co.
A
B
C
Motorcycle production registered negative growth for several consecutive years as local government restrict or ban motorcycle use. Two-wheel motorcycle, in particular, reported the largest production decline.
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Source: SMM
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5
10
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5
10
15
2005 2010 2015E 2020E
Motorcycle outputMotorcycle ownershipLead-acid battery demand
Lead-acid(Battery(End(Use Base(Stations(
Number(of(Base(Stations
Number(of(Base(StationsCapacity(and(Expansion(Plans(at(Major(Energy-Storage(Lead-Acid(Battery(Producers
Company(Capacity(
10,000(kvah
Expansion(plans(
NaradaPower(
21
Unit: 10,000 communication channels
Unit: 10,000 kvah
20
25
30
35
20
25
30
35
© SMM. All rights reserved.
Power(Source(Co.
Shandong(Sacred(Sun(
Power(Sources(Co.
A
B
C
The MIIT issued 4G TD-LTE licenses to China Mobile, China Telecom and China Unicom – China’s three telecom giants – in December 2013. This allowed the number of base stations to shoot up in 2014, which will continue boosting demand for batteries used in telecommunication over the next five years.
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Source: SMM
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10
15
20
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10
15
20
2005 2010 2015E 2020E
Base stationsBase station ownershipLead-acid battery demand
Lead-acid(Battery(End(Use Exports(
Lead-acid(Battery(Exports(2005-2020E1
Lead-acid(Battery(Exports
15
20
25
30Unit: piece
© SMM. All rights reserved.
overseas(demand tariff( exchange(rate( Shanghai/LME(lead(price(ratio
contributory(factor2
5
10
2005 2010 2015E 2020E
Lead-acid battery exports Ignition lead-acid battery Other types of lead-acid battery
� China will put lead-acid battery consumption tax into effect in 2016, which will push up costs for Chinese lead-acid battery producers. This move will also weaken competitiveness of Chinese lead-acid battery in overseas market, thus affecting battery export growth.
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Source: SMM
New(Drivers(of(Lead-acid(Battery(Consumption
E-Tricycle(and(E-Quadricycle(Ownership
Market(Conditions(
� Shandong is one of the major producing
regions of e-tricycles. E-tricycles are quite
popular in second-tier and third-tier cities.
However, some local governments restrict use
2E-Tricycle(and(E-Quadricycle(Ownership1
Unit: 10,000 e-tricycles and e-quadricycles
Unit: 10,000 kvah
20
25
30
35
20
25
30
35
© SMM. All rights reserved.
However, some local governments restrict use
of e-tricycles in recent years.
� E-quadricycle was new in China until two
years ago. E-quadricycle battery is mainly sold
to e-quadricycle manufacturers at present.
Tianneng Group is the major producer of e-
quadricycle battery.
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Source: SMM
0
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10
15
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10
15
2005 2010 2015E 2020E
E-tricycle outputE-quadricycle outputOwnershipLead-acid battery demand
Li(Battery(Substitution(for(Traditional(Lead-acid(Battery
Li(Battery(Substitution(for(Traditional(Lead-acid(Battery
Li(Battery((Market(
� Advantages of Li battery: 1. Lightness; 2. More
energy efficient and environmentally friendly than
lead-acid battery; 3. Life of Li battery is typically
twice longer than that of lead-acid battery.
2Production(of(Li(Battery(Vs(Lead-acid(Battery(1
40%
50%
60%
20
25
30
Unit: 10,000 pieces
© SMM. All rights reserved.
Source: SMM
� E-bike is the first example of Li battery
substitution for lead-acid battery. Li battery is
increasingly chipping away at the market share of
automotive lead-acid battery as new energy
vehicle market is expanding rapidly during 2014-
2015. Currently, substitution rate of Li battery for
lead-acid battery is around 10% in China. China’s
Li battery production is expected to grow at about
10% pace each year.
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0%
10%
20%
30%
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5
10
15
2005 2010 2015E 2020E
Li battery output Traditional lead-acid battery outputGrowth of Li batteryGrowth of traditional lead-acid battery
Traditional(Lead-acid(Battery(Producers(Set(Foot(into(New(Types(of(Batteries(
Start-Stop(Battery
Company(Capacity(
10,000(kvah
Expansion(plans(
Fengfan(Co.
Capacity(and(Expansion(Plans(at(Major(Start-Stop(Battery(Producers2
Development(Trend(of(Start-stop(Battery(in(Coming(Five(Years(1
800
1000
1200
1400
Unit: 10,000 kvah
© SMM. All rights reserved.
Fengfan(Co.
Camel(Group
Johnson(Controls
A
B
C
Major Chinese battery manufacturers are ramping up investment and production of start-stop batteries, which enjoy bright market prospects because of its energy efficiency and environmentally friendliness. Market share of start-stop batteries is less than 10% in China, well below 40% in Europe and the US. However, its market share is expected to rise to 40-50% in coming five years.
20Source: SMM
0
200
400
600
800
2010 2015E 2020E
Traditional lead-acid battery
Start-stop battery
Traditional(Lead-acid(Battery(Producers(Set(Foot(into(New(Types(of(Batteries(
Lead-carbon(battery:(motive(battery(suitable(for(use(in(new(energy(vehicles
Indicator( Lead-carbon(battery Ordinary(lead-acid(battery
specific(power 240W/kg 180W/kg
IEC61427 and(GB/T22473-2008cycleendurance(life >3times
15 times remaining(capacity(93% 4 times
80%DOD cycle(life( 1600 times remaining(capacity(93% 400 times
30%DODcycle life( 3500 times remaining(capacity(93% 1000 times(
GB/T22473-2008(ability(to(receive(
Company(
Existing(Capacity(
Expansion(
Plans(
Shandong(Sacred(
Sun(Power(
Sources(Co.
NaradaPower(Source(
© SMM. All rights reserved.
GB/T22473-2008(ability(to(receive(charge >2.0 2.8 2
GB/T22473-2008low-temperature performance discharge(capacity>80%(when(temperature(is-
10
90% 80%
Fast(charge(ability 1h 12h
SBA-S0101 hybrid(motive(battery(cycle(life >150000 times( 30000 times(
design(life hybrid(motive(type
Source(Co.
Guangdong(
DynavoltPower(
Technology(Co.
A
B
C
21
� Lead-carbon battery represents technical innovation of lead-acid battery and has many advantages: 1. Charge eight times faster than lead-acid battery; 2. Discharge power is three times higher than lead-acid battery; 3. Cycle life is as long as 2,000 times, which is six times longer than lead-acid battery; 4. High price-performance ratio. Although lead-carbon battery is more expensive than lead-acid battery, much longer cycle life allows it to have higher price-performance ratio; 5. Safe and stable. Lead-carbon battery could be widely used in energy-saving field.
Source: SMM
Raw(Material(Use(in(Lead-acid(Battery:(Substitution(of(Secondary(Lead(for(Primary(Lead
Secondary(Lead(Use(by(Lead-acid(Battery(Producers
Type Company
Ratio of Secondary Lead and Primary Lead Use
2010 2015E 2020E
secondary lead
primary lead
secondary lead
primary lead
secondary lead
primary lead
motive battery
TiannengGroup
ChilweeGroup
© SMM. All rights reserved.
ignition battery
FengfanCo.
Camel Group
backup battery
NaradaPower
Source Co.
Shandong Sacred
Sun Power Sources
Co.
22Source: SMM
Lead-acid(Battery(Market(Trend((
How is lead-acid battery market reshaped by growing trend of enclosed battery formation process and lead-calcium alloy battery
upgrade into rare earth alloy battery?
Lead-acid battery cost structure and development trend
© SMM. All rights reserved. 23
trend
Booming new energy vehicle market is boosting demand for Li battery. Will lead-acid battery be fully replaced by Li battery? Will
lead-carbon battery be the game changer?
Technical progress in secondary lead smelting process results in higher ratio of secondary lead use by lead-acid battery
manufacturers. How should companies establish green value chain?
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