With lead prices on the rise in 2007, the raw material price increase is hitting manufacturers who use the substance, including battery manufacturers. This, of course, ends up affecting battery units used with alarm systems.
Already by Jan. 6 of this year, Money Week was reporting that lead prices were up 40 percent for the year, and that there was an expected material deficit equivalent to 50,000 metric tons. Stockpiles, reported Money Week, were under 47,000 tons and had been decreasing over the year. Those stockpiles were equivalent to less than two days of worldwide lead consumption.
Now, it seems that companies like Honeywell, which is one of top buyers of lead-acid batteries in the security industry, are feeling the cost increases. A recent letter to Honeywell product users and resellers by Honeywell Security and Custom Electronics President Ron Rothman illustrated this lead crunch.
Rothman indicated to Honeywell's customers that because of lead price increases, the cost was being felt in the battery market place.
"Since we do not manufacture batteries, we, like you, are subject to market forces beyond our control," Rothman told Honeywell customers. "While we have attempted to protect our customers from the impact of this increase, the worldwide shortage of this metal has left us no alternative but to pass along a portion of this increase."
Honeywell detailed price increases on the common batteries used in its residential alarm panels, commercial panels and communicators. Admittedly, the price increases were fairly small, ranging from $1.90 to $3.45. Rothman attributed the fairly minimal price increase to the fact that Honeywell is such a large buyer of lead-acid batteries, and can get market discounts.
One thing is for sure, the price for lead isn't likely to decrease. The market conditions for this are being especially driven by China. The Chinese, which are leading exporters of lead, have not only decreased their exports and added a 10 percent tax on lead, but the country's industries are also using more lead in their own manufacturing processes.