From: Lucy Hornby -Reuters
Published October 10, 2007 09:48 AM

China "e" bikes silently drive lead demand

BEIJING (Reuters) - As the red light changes, Han Zhang turns the handlebar of his battery-driven bike, pushes off with his foot, and whirrs silently along a Beijing boulevard.

His yellow bike looks like something between a bicycle and a scooter, but to the lead industry, he's driving a car.

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Every year, millions of Chinese are hitting the streets on "e" bikes - battery-powered contraptions that are increasingly popular as soaring fuel prices make traditional motorbikes and scooters expensive to drive.

The bikes are getting bigger, faster and more glamorous - and the growing size of their batteries is soaking up increasing amounts of lead.

"Everyone looks at the "e" bike as a replacement for a motorbike. But for the lead industry it's an astonishing change. In terms of lead demand, one "e" bike is one car," said Mark Stevenson, technical manager for lead at Nyrstar in Australia.

"If someone says there is growth of a million bikes a year, the lead industry thinks 'who cares'. But if you say a growth of a million cars per year, that changes the whole picture."

Yet a 48-volt bike battery uses just under 10 kilograms of lead, similar to that used by a medium-sized car like a Toyota Camry. They last for about a year, compared with over three years for a typical car battery.

"There's a huge amount of lead being carried around on bikes in China," said Huw Roberts of CHR Metals Ltd. He estimates the bikes produced through the end of last year have absorbed about 400,000 tons of lead.

That new source of demand could help drive up lead prices, which hit a record high of $3,835 a ton on October 9.

Lead has been the star performer on the London Metal Exchange and is up by 130 percent this year.

SILENT FORCE

China produced 19 million battery driven bikes in 2006, and that figure could rise by 30 percent this year, said Zhang Changhai, lead analyst with metals consultancy Antaike in Beijing.

"The explosive growth is already over, and we expect new standards being developed for the larger bikes to slow growth in 2008," Zhang said.

The standards for newer, 48-volt bikes could be along the lines of those for the more common 36-volt bikes, limiting speed and size and setting guidelines for which companies can produce them to weed out cut throat competition.

Estimates for how many companies produce "e" bikes vary from 100 to 300 firms, but all agree that their low design and start-up costs have driven margins to the bare minimum, eroding profits for more established firms like Shanghai Forever Co.

Meanwhile, 72-volt bikes that are as big and powerful as motorcycles are alarming city governments. They have been banned in the southern boom cities of Guangzhou, Shenzhen and Zhuhai.

"When you have these things whizzing along in the bike lanes at 60 kilometers an hour it's getting a little dangerous," Roberts said.

"They are known as the 'silent killer' because you can't hear them coming."

Other cities are trying to limit the bikes' speed and size, and may soon require licenses to use them.

Other innovations include bikes that use lithium-ion batteries which generally last longer and give more power for their weight.

With prices above 3,000 yuan ($400), they have found an export niche. But in the domestic market, they are unlikely to replace bikes using lead-acid batteries which cost between 1,000 yuan and 2,000 yuan.

At a bicycle shop in central Beijing, salesman Zhang Guangyi pointed to his best selling model, a long black bike with flames painted along its body. It only costs about 1 yuan to charge the bike enough for 240 kilometers of use, he noted.

"Who drives motorbikes anymore? Fuel is too expensive and these have no emissions so they are better for the environment - its popular to think about that these days."

($1=7.516 Yuan)

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