In the absence of strong demand for automotive batteries, the demand for industrial batteries has kept lead acid battery manufacturers in India afloat during the COVID-19 lockdown.
Several battery makers in India had to keep their process running as they served various essential sectors. Amara Raja, a battery manufacturing company, catered to the telecom sector during the lockdown which was classified as an essential service.
The industrial sector that consumes lead battery comprises power backup equipment (UPS), batteries for infrastructure sector like telecom sector, railways and power generation. Inverter batteries are required to power large buildings, office spaces and households.
The auto sector has been sluggish since mid-2019 but the pandemic has pushed the sector to rock bottom. Auto sales in India fell by 77pc in May from the year prior owing to the pandemic while April recorded near-zero sales. Major car manufacturer, Maruti Suzuki’s production dipped 98pc in May owing to lockdown.
However, essential services like hospitals, telecom, food producers and food storage houses were operational.
In terms of lead acid battery consumption, the low demand from auto sector was offset by relatively higher demand from industrial sector during the pandemic. With many employees working from home, households invested in home inverters and office spaces invested in better power generators as many had to shift to cloud services.
The industrial sector consumes around 30pc of lead while the auto sector consumes 60pc.
In April, Germany’s battery manufacturer Moll Batterien filed for insolvency citing low demand from auto sector as sales declined. The company declared it would only resume production of batteries if the auto sector returns to full production as only that can help the company revive.
German arm of French company Recylex also filed for insolvency citing weak demand and falling prices of base metals, including lead as the auto sector impacted business heavily.
Demand for batteries is bound to increase in the coming weeks, Amara Raja said. This is likely to boost demand for secondary lead ingots, remelted lead and purified lead in the coming months. In June, demand for secondary lead ingots batteries increased compared to April and May but bookings are still on the lower side compared to previous year, down by 40-50pc.
In Delhi, trades were concluded at around Rs138,000-139,000/mt ($1,825- $1,838/mt) in the week ending June 24, up by around Rs5,000/mt ($66.1/mt) from the first week of June. Prices are slowly climbing as an effect of improved demand for lead acid batteries from the industrial sector.
($1 = Rs 75.62)