Hike in lead prices causes battery price to increase

On September 16, 2007 in General Information

I was looking around on http://www.solarray.com/ when I stumbled upon the “batteries” page of their online catalog. At the bottom was this:

“**NOTE **
The price of lead is climbing every day. From 8/1/07 to 8/20/07 it has gone up 25%. Please email support@solarray.com for current prices.”

I’d heard something in passing somewhere else in the past, but could not remember the specifics. A quick search on google news brought up this article from http://www.ndtvprofit.com :

“Nisha Poddar

Friday, September 7, 2007 (Mumbai):

As lead is leading the metal rally, chances are that your car batteries may get expensive about 50-60 per cent of the cost for car battery makers like Exide and Amara Raja goes in buying lead, which is an essential raw material and with lead prices rising over 75 per cent this year price hikes are becoming a norm.

“Lead price rise affects the cost of production,” said AK Mukherjee, CFO, Exide Industries.

Lead prices have been on a constant rise this year and with it car battery prices have also increased by 15 – 20 per cent. But it might not be easy for the battery manufacturers to hike prices again. They face stiff competition from the unorganized sector of local car battery makers.

“We try to overcome by cost reduction, R&D methods and high volumes compensate,” said AK Mukherjee, CFO, Exide Industries.

Situation may be grim right now but analysts don’t feel that the lead rally will last too long. Some analysts feel that the lead prices will come to $1,600 per tonne levels by FY09.

So it will be back to where it started the rally from but till then the key players like Exide and Amara Raja will suffer margin pressure. And if market forces allow, a third price hike in car batteries cannot be completely ruled out. “

In other words, buy your batteries now, folks. Unless you are of the opinion that the prices will start to come back down soon, which they very well may.

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