China could face a shortage in domestic production of lead-acid batteries in the coming years, as environmental protection efforts by Beijing reduce capacity and local demand grows.
“Local lead-acid battery capacity will fall by 10-30% in the coming years, and will lead to an obvious capacity shortage,” Xu Hong, general secretary of the lead-acid battery branch of China Electrical Equipment Industry Assn, told delegates at a Shanghai Metals Market conference.
The number of Chinese lead-acid battery producers has sharply decreased to less than 300 from nearly 2,000 after last year’s government clampdown on the sector after a slew of pollution scandals in 2011, according to Hong.
This is a turnaround for the sector, which posted an average annual growth of 17.5% between 2006 and 2010.
“We expect about 500 producers to stay after the new industrial threshold comes into effect,” Hong said.
China’s ministry of industry and information technology is in the middle of soliciting public opinion about entry standards for lead-acid battery makers. The proposed standards require a minimum new capacity of 500,000 kW hours and an existing capacity of 200,000 kW hours.
The new standards also require lead-acid battery makers to be certain distance away from residential areas.
Meanwhile, local demand is still rising, with electric vehicles expected to post healthy levels of growth in the coming years, Hong said.
E-bikes, for example, still have huge development potential, and Hong expects the e-bike lead-acid battery market to reach a size of 55 billion yuan ($8.7 billion) by 2015.
Hong also predicts the E-tricycle sector to see demand of 20 billion yuan by 2015.
The telecommunications and electric car sectors will develop 22 billion yuan and 3 billion yuan market share for lead-acid batteries, respectively, by 2015, according to Hong.
Hong also believes China’s lead-acid battery sector will becoming intensely competitive from 2014, after ongoing industry consolidation comes to an end.