China’s electricity crisis spreads, closes factories, darkens growth prospects – .

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China’s electricity crisis spreads, closes factories, darkens growth prospects – .


Workers at grid operator China Southern Power Grid inspect the power cables connecting transmission towers in Dongguan, Guangdong province, China on May 29, 2018. Photo taken on May 29, 2018. REUTERS / Stringer

BEIJING, Sept.27 (Reuters) – Worsening electricity shortages in China have halted production at many factories, including many suppliers to Apple and Tesla, while some northeastern stores operated by candlelight and Shopping centers closed earlier as the economic toll of the squeeze increased.

Rationing has been implemented during rush hours in many parts of northeast China since last week, and residents of cities like Changchun said the cuts were occurring earlier and lasting longer, said reported the official media.

On Monday, State Grid Corp pledged to ensure basic power supply and avoid blackouts. Read more

China’s power shortage, caused by limited coal supplies and tougher emissions standards, has hurt output in industries in several regions and is weighing on the country’s economic growth prospects, analysts said.

The impact on homes and non-industrial users comes as nighttime temperatures drop to near freezing point in China’s northernmost cities. The National Energy Administration (NEA) has asked coal and natural gas companies to ensure sufficient energy supply to keep homes warm during the winter. Read more

Liaoning Province said power generation had declined significantly since July and the supply gap widened to a “severe level” last week. It extended power cuts to industrial businesses to residential areas last week.

Huludao City told residents not to use energy-intensive electronic devices like water heaters and microwave ovens during peak periods, and a resident of Harbin City, in Heilongjiang Province, told Reuters that many shopping malls were closing earlier than usual at 4 p.m. (0800 GMT).

The power crunch is disrupting Chinese stock markets at a time when the world’s second-largest economy is already showing signs of slowing. Read more

The Chinese economy is grappling with brakes in the real estate and tech sectors and concerns about the future of cash-strapped real estate giant China Evergrande (3333.HK). Read more

PRODUCTION BENEFITS

The coal shortage and tougher emission standards have resulted in power shortages across China.

China has pledged to reduce its energy intensity by around 3% in 2021 to meet its climate targets. Provincial authorities have also stepped up enforcement of emission restrictions in recent months after only 10 of the 30 mainland regions managed to meet their energy targets in the first half of the year. Read more

The power pinch has been affecting manufacturers in the main industrial centers on the east and south coasts for weeks. Several key suppliers from Apple (AAPL.O) and Tesla (TSLA.O) have halted production at some factories. Read more

At least 15 Chinese companies have said in exchange documents that production has been disrupted by power cuts, while more than 30 Taiwan-listed companies with operations in China have halted work to comply with power limits. .

The steel, aluminum and cement industries have also been hit hard by production restrictions, with around 7% of aluminum production capacity suspended and 29% of national cement production affected, have Morgan Stanley analysts wrote in a Monday note. They said paper and glass could be the next industries to face supply disruptions.

Producers of chemicals, dyes, furniture and soy flour have also been affected.

Seasonal production of key industrial products in China

GDP REDUCTIONS

The fallout from the electricity shortage has prompted some analysts to downgrade their growth prospects for 2021.

Nomura lowered its GDP growth forecast for the third and fourth quarters to 4.7% and 3.0%, respectively, from 5.1% and 4.4% previously, and its forecast for the whole of the year at 7.7% against 8.2%. Read more

“The shock of the power supply in the world’s second-largest economy and the world’s largest manufacturer will spill over into global markets,” Nomura analysts said in a September 24 note, warning that the global textile supply, toys and machine parts could be affected. .

Morgan Stanley analysts said production cuts, if prolonged, could cut fourth quarter GDP growth by 1 percentage point.

Thermal coal price in China

Last week, major coal producers in China gathered to try to resolve shortages and curb price increases. Read more

China, the world’s largest energy consumer and source of climate-warming greenhouse gases, has said it aims to peak carbon emissions by 2030 and net zero. here 2060.

Reporting by Shivani Singh, Min Zhang in Beijing, additional reporting by Kanishka Singh in Bengaluru, Ben Blanchard in Taipei, Yiming Shen in Shanghai and Beijing newsroom; Editing by Ana Nicolaci da Costa and Tony Munroe

Our Standards: The Thomson Reuters Trust Principles.

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