April 19 (Bloomberg) -- The China Bicycle Association said the government may allow electric bicycles to be faster and heavier, reversing an earlier plan to enforce limits. Demand for the bikes has helped drive a 52 percent gain in lead prices over the past year.

“We feel quite positive” that the authorities may loosen restrictions for “e-bikes” which remain in demand, especially in China’s inland regions, Niu Qin, head of general affairs at the association, said in an interview in Beijing today. The government may not follow through on its plan to strictly enforce existing limits on speed and weight as clearer traffic regulations have been implemented in provinces including Hebei and Shandong, Niu said.

Larger, faster vehicles may boost demand for lead used in batteries, helping extend gains in London prices, which have surged in the past year as China boosted imports. The e-bike market in China accounts for more than 20 percent of the country’s lead consumption, according to Barclays Capital.

“Stable e-bike output is bullish for lead batteries,” Ni Yaoxiang, chief metals analyst at Guojin Futures Co. said in an interview. “But we also need to see the other side of the coin that with lead prices having climbed so much, replacements for lead batteries, such as lithium, may make a breakthrough technologically and gain more usage commercially.”

The China Bicycle Association advises government bodies on industry policies for e-bikes. Calls to China’s Standardization Administration, which issues industry rules, were not answered.

Sales Surge

Authorities said in December they were considering strictly limiting the speed and size of e-bikes for road safety. E-bike sales in China have surged in the past decade because they are affordable and don’t require driving qualifications or a license.

Speed and weight are limited to 20 kilometers an hour and 40 kilograms. Bikes are usually powered by a 10 to 15 kilogram battery, with a lead content of about 9 kilograms, according to Niu. Lead for three-month delivery on the London Metal Exchange fell 2.2 percent to $2,212 a ton at 4:30 p.m. in Shanghai.

The government this year initiated a subsidy on purchases of e-bikes by farmers, which may prove to be bullish too, Niu said. Still, as some 110 million such bikes are now running on the country’s streets, “room for new additions has become limited,” he said.

The country produced 23.7 million e-bikes last year, and output may stay above 20 million in the next three to five years as more sales are expected in the countryside and inland regions, Niu said.

China surpassed the U.S. as the world’s largest auto market last year after the Asian nation’s government halved the consumption tax on small vehicles, sending automobile sales up by 46 percent. Passenger car sales jumped 76 percent to 3.52 million units in the first quarter, the China Association of Automobile Manufacturers said this month.

--Li Xiaowei. Editors: Richard Dobson, Jake Lloyd-Smith.