Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

China energy crunch triggers shutdowns, pleas for more coal

Economic IndicatorsSep 28, 2021 07:47AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: A man walks near a coal-fired power plant in Harbin, Heilongjiang province, China, November 27, 2019. REUTERS/Jason Lee/File Photo 2/2

By David Stanway

SHANGHAI (Reuters) - China faces mounting pressure to ramp up coal imports and ensure supplies to keep lights on, factories open and water flowing as a severe power crunch roils the northeastern industrial heartland.

With electricity shortages sparked by coal shortages crippling large sections of industry https://www.reuters.com/world/china/chinas-power-crunch-begins-weigh-economic-outlook-2021-09-27, the governor of Jilin province, one of the hardest hit in the world's no.2 economy, called for a surge in coal imports, while a power company association said supply was being expanded "at any cost".

News organisations and social media carried reports and posts saying the lack of power in the northeast had shut down traffic lights, residential elevators and 3G mobile phone coverage as well as triggering factory shutdowns.

A utility in Jilin even warned power shortages could disrupt water supplies at any time, before apologising for causing alarm.

For the second straight day, the main state grid operator sought to reassure customers, saying it would work to guarantee coal supply and strictly control power use by high-energy consuming and polluting sectors, and ensure power supply to residents during the October holidays and winter heating season.

Cities such as Shenyang and Dalian - home to more than 13 million people - have been hit, with disruption at factories owned by suppliers to global companies like Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA). Jilin is one of more than 10 provinces forced to ration power https://www.reuters.com/world/china/what-is-behind-chinas-power-crunch-2021-09-27 as generators feel the heat of soaring coal prices that they can't pass on to consumers.

Speaking to power firms on Monday, Han Jun, the governor of Jilin province, home to nearly 25 million people, said "multiple channels" needed to be set up to guarantee coal supplies, and China should source more from Russia, Mongolia and Indonesia.

Han said the province would also urgently send teams to secure supply contracts in the neighbouring region of Inner Mongolia, according to Jilin's official WeChat social media account.

Goldman Sachs (NYSE:GS) estimated that as much as 44% of China's industrial activity has been hit by power shortages, potentially causing a one-percentage-point decline in annualised GDP growth in the third quarter, and a two-percentage-point drop from October to December.

It said in a Tuesday note that it was cutting its 2021 GDP growth forecast for China to 7.8%, from the previous 8.2%.

'AT ANY COST'

The power crunch has taken hold https://www.reuters.com/world/china/what-is-behind-chinas-power-crunch-2021-09-27 as a shortage of coal supplies, toughening greenhouse gas emissions standards and strong demand from industry have pushed coal prices to peaks.

China's thermal coal futures hit a record high at 1,330 yuan ($205.68) per tonne on Tuesday.

Rationing has been implemented during peak hours in many parts of northeastern China since last week, triggering state media reports of power supply disruptions in many cities and stoking concern on social media.

As some shops in the northeast operated by candlelight and malls shut early, posts on China's Twitter-like Weibo (NASDAQ:WB) expressed concern about water after a utility in Jilin warned users that power shortages could hit supplies at any time.

Jilin governor Han urged companies to fulfil their "social responsibilities" and "overcome the difficulties" caused by coal price rises.

The China Electricity Council, which represents power suppliers, said on Monday that coal-fired power companies were now "expanding their procurement channels at any cost" in order to guarantee winter heat and electricity supplies.

It said China needed to increase production and supply of coal while guaranteeing safety and environmental protection. More medium- and long-term contracts needed to be signed to raise power plant inventories ahead of winter.

Coal traders said finding fresh import sources may be easier said than done.

"Russia has to first meet demand from Europe, Japan and South Korea," said one northeast China based trader. "Indonesia's export shipments have been curbed by rainy weather the last couple of months and Mongolia's exports, mostly by trucks, are small."

David Fishman, China energy policy researcher and manager at the Lantau Group consultancy, said flaws in China's pricing system were ultimately to blame.

"In the short term, the only relief policies that make sense are digging more coal out of the ground, which is bound to be an unpopular idea, or make end-users pay more for their power," Fishman said.

Policymakers had previously warned that China needed to build more coal plants in order to offset potential power shortages over the 2021-2025 period, but utilisation rates at existing plants remain low.

Lauri Myllyvirta, lead analyst with the Helsinki-based Centre for Research on Energy and Clean Air, said northeast China currently had 100 gigawatts of coal-fired capacity, which would be more than enough to meet demand if plants had the incentive to buy more coal.

"Not a single grid region has reported peak loads that would be even close to exhausting available generating capacity," he said.

China energy crunch triggers shutdowns, pleas for more coal
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (4)
Alan Rice
Alan Rice Sep 28, 2021 12:57PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
More "energy"/Less biosphere. Tic-toc,
Sean Livingstone
Sean Livingstone Sep 28, 2021 8:26AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Did I say this is anti Chinese than anti communist? Look at buz burkhead comment. Apparently he has no idea what's really going on in China. For those of you who are complaining about pollution in China, this is due to slow shutting down if coal fired power plant in China to reduce carbon emissions in China. Media enjoys pumping fake news...
Buz Burkhead
Buz Burkhead Sep 28, 2021 8:19AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Elon Musks pals in the CCP better get the slave labor going in those coal mines. Those Lazy Uigurs need to skip there once a day rancid fish and rice bowl meal and dig more coal so he can get those parts for his electric self driving firebomb cars
Buz Burkhead
Buz Burkhead Sep 28, 2021 8:17AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Elon Musks pals in the CCP better get the slave labor going in those coal mines. Those Lazy Uigurs need to skip there once a day rancid fish and rice bowl meal and dig more coal so he can get those parts for his electric self driving firebomb cars
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email