Increases in the price of lead have pushed up the cost of batteries used in motor vehicles, power back-up systems, laptops and other electrical and electronic devices.
The price of lead in the international metal market touched $3,900 (Dh14,300) per tonne earlier this year before falling back to the current level of $2,030.
Industry sources say 71 per cent of world lead production is used for lead-acid battery production and traders and manufacturers are anxiously monitoring price movements.
"Vehicle battery prices were stable for several years but when the price of lead started shooting up the price of batteries also went up substantially," said a spokesman for Dubai-based Al Gaddah General Trading Company, which deals in tyres, batteries and other auto parts.
"The price of a car battery has gone up by more than 50 per cent in the last six months and the situation is the same with other products using lead-acid batteries."
Suneel Wahal, Divisional Manager of Emerald Spareparts, said: "The price of a normal car battery has gone up from Dh50 a few years ago to Dh155 now. Consumers here are very sensitive about automobile spare part prices and they go for cheaper options available in the market."
Sherry Wu, Sales Manager of Chinese battery manufacturer Zhejiang Just Electrical Appliances Company, said the lead price started falling this month but producers were still worried. "Lead accounts for 80 per cent of the cost of a car battery. We have had to increase our prices because the domestic price of lead is more than the international price due to a government tax. China is the world leader in lead production accounting for 70 per cent of global production."
Wu said the company's main products were car batteries, uninterruptible power supply batteries and emergency lighting products.
"We currently produce 1,200,000 batteries per year and 70 per cent are exported to Europe, America, the Middle East and Africa," she added. "Our future depends on future movements of the lead price."
Scrap dealers say the record price of lead in the market and reports of shortages have boosted demand for used batteries that can be recycled.
Nakhuda International, a Karachi-based importer of scrap materials, currently requires 3,000 tonnes of used lead-acid vehicle batteries for recycling and is prepared to pay up to $300 per tonne. The company is also looking for completely drained and dry used batteries and lead scrap obtained from old batteries with no acid content.
Drop in global lead stocks
World stocks of lead have fallen from 550,000 tonnes in April 2002 to 300,000 tonnes in April 2008, says a new report.
And over the same period the price rose from $500 per tonne to $3,800 by early 2008 before slipping back to $3,500 in April, according to research by Paul White, Head of Forecasting and Statistics at the International Lead and Zinc Study Group in Portugal. Demand for the metal is forecast to grow by 3.9 per cent this year – due largely to an expected increase in the production of batteries for electric bicycles in China. Output from the world's lead mines is expected to rise by 8.4 per cent in 2008.
The lead-acid battery is a vital component in each of the 60 million petrol and diesel vehicles produced each year.