Commodities Buzz: Lead Demand Will Get Underpinned by Replacement Market Demand and OEMs Demand

Indian Lead demand will keep moving upwards thanks to growing demand from OEMs in line with their capacity expansion and new product launches. Rising personal disposable income will increase the sales of two wheeler in India owing to high preference of such vehicles as a mode of transportation. Rising environmental concerns,coupled with volatile oil prices may persuade consumers to use electric powered vehicles. The Indian economy has been growing at an accelerated pace since 2014,supported by favorable government reforms and stringent fiscal regime that reigned in inflation.

Growing replacement demand, which is not only less cyclical, but also enjoys higher profitability will be beneficial for Lead. Focus on capturing market share in the unorganized commercial vehicles and tractor battery markets will also underpin the growth story. Reinforce our prominence in the e -rickshaw battery market is another feather in the cap of Lead.The Indian battery space has been flooded by a wide range of batteries depending upon their application. But, Lead-acid batteries are the most widely used battery in the market, including valve-regulated lead-acid (VRLA), absorbed glass material (AGM), and gel batteries, backed up by efficient recycling process.

The lead acid battery market can be divided into two broad spectrums – automotive and industrial batteries- and finds wide application in transportation, communications, power ,defence, motive, solar and railway industries. The automotive segment contributes in excess of 60% of the total turnover of the Indian lead acid battery market.

The Central Governments Auto Mission Plan II forecasts the passenger vehicle (PV) market to more than triple to 9.4 million units by 2026 from 2.8 million now, provided the economy grows at an average rate of 5.8% a year.India has emerged as the worlds largest two-wheeler market leaving behind China and Japan. In the financial year 2016-17, a total of 17.7 million two-wheeler were sold in India. This means that the demand cycle is intact which will be benefiting Lead markets.