China seeks to quell fears of power shortages, as coal prices skyrocket, winter is coming

  • China orders railway companies and local governments to guarantee coal supply
  • Lack of heat is a problem, says a Shenyang resident
  • China’s thermal coal prices hit an all-time high amid tight supplies
  • Beijing reassures on energy and coal ahead of winter heating season
  • Considering rising industrial energy prices: press report

SHENYANG, China, Sept. 29 (Reuters) – China on Wednesday demanded that railway companies and local authorities improve their game in shipping vital supplies of coal to utilities, as key regions fail. 2 The economy is facing power outages that have paralyzed industrial production.

The order, issued by China’s powerful state planner, comes after a collision of scarce coal supplies, stricter emissions standards and strong manufacturing demand has pushed up the price of coal. China’s largest source of electricity, to dazzling records, just as winter approaches. read more

Thermal coal futures in China hit an all-time high of 1,376.8 yuan ($ 212.92) per ton earlier on Wednesday, adding even more pressure on power companies unable to recoup additional fuel costs. Curbs have been imposed on energy use in large areas of the country, especially in three northeastern provinces that are home to almost 100 million people.

“If there is a power outage in the winter, the heat also stops,” said Fang Xuedong, 32, a delivery driver in Shenyang, the capital of Liaoning province, about a 90-minute flight northeast of Beijing. .

“I have a child and an elderly person at home, if there is no heating, that is a problem.”

The growing alarm among residents over the power shortage, now in its second week, comes as the state planner, the National Development and Reform Commission (NDRC), formally urged local economic planners, energy administrations and railway companies to strengthen coal transportation to satisfy citizens. ‘demand for heating during the winter season.

“Each rail company must strengthen the transportation of coal to power plants (utilities) with an inventory of less than seven days and launch the emergency supply mechanism in a timely manner,” the NDRC said. read more

China, the world’s top coal consumer, imported a total of 197.69 million tonnes of coal in the first eight months of 2021, down 10% year-on-year. But August coal imports rose by more than a third due to tight domestic supplies.

This week, officials have repeatedly tried to assure residents that there will be power for domestic use and for heating as winter approaches. China is considering raising industrial energy prices to ease the supply crisis, Bloomberg News reported Wednesday, citing unidentified sources. read more

But power rationing has been implemented during peak hours in many parts of northeast China since last week, with news reports and social media posts pointing to cuts to traffic lights and 3G communications networks in the region.

Energy rationing map of China’s provinces

‘EMBOSSED’ BY RESTRICTIONS

Curbs also continue to affect manufacturers. An internal document from a large Chinese tech components maker reviewed by Reuters said that more than half of its daily production in Kunshan, in the eastern industrial province of Jiangsu, had been suspended since earlier this week.

Meanwhile, in Foshan, in southern China’s bustling Guangdong Province, the company was only allowed to produce late at night and early in the morning from mid to late September, according to the document, which says that manufacturers were “ambushed” with the new restrictions. .

Li Shuo, Senior Policy Advisor at Greenpeace East Asia, called on China to reform its energy sector to help it absorb price fluctuations and ensure stability.

“This energy shortage will have huge economic and political implications. But let’s be clear, the main cause is the high price of coal, NOT climate policies,” Li wrote in a Twitter post this week.

“In any case, the energy shortage demonstrates the importance of moving away from coal, that a fuel that has been a keyword for energy security is not safe at all.”

Meanwhile, ANZ said on Wednesday that a 10% nationwide power outage in China could cut 1.3 percentage points of the country’s overall GDP growth, becoming the latest major bank to warn of the potential economic impact of The restrictions. read more

($ 1 = 6.4662 Chinese yuan)

Reporting by Gabriel Crossley in Shenyang and Shivani Singh in Beijing; Additional reporting from Min Zhang in Beijing, David Stanway in Shanghai, Yimou Li in Tapei, the Beijing newsroom, and Tom Daly; Editing by Kenneth Maxwell and Ana Nicolaci da Costa

Our Standards: The Thomson Reuters Trust Principles.

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