Cold weather keeps China’s coal prices high, power crisis causes factory inflation

File Photo: On September 29, 2021, a truck transports coal at a coal-fired power plant in Shenyang, Liaoning Province, China. REUTERS / Tingshu Wang / File Photo

October 14, 2021

By Muyu Xu and Shivani Singh

Beijing (Reuters) -China’s coal prices on Thursday recorded as cold weather rushed to the north of the country and power plants stockpiled fuel to mitigate the energy crisis that is driving gate inflation in unprecedented factories Maintained near the high price.

China’s expanding electricity crisis caused by a surge in post-pandemic industrial demand due to coal shortages, record high fuel prices and the shift to more environmentally friendly fuels has supplied many of the major global brands such as Apple Inc. We have stopped production at many factories, including ours.

Soaring energy prices sent the highest producer price index (PPI) in September for at least 25 years, up 10.7% year-on-year, official data from China on Thursday said.

Cold winter weather can exacerbate the situation.

China’s National Meteorological Center on Wednesday predicts that strong winds could reduce average temperatures by as much as 14 degrees Celsius in most parts of the country this week.

Graphics: Temperatures in northern China are lower than normal and heating demand is increasing in a pinch of electricity –

The three northeastern states of Jilin, Helionjan and Liaoning were one of the worst blows from last month’s power shortages, with some regions in northern China, including Inner Mongolia and Gansu, mainly fueled by coal. We have started winter heating. Colder than usual weather.

Beijing has taken a number of steps to curb the rise in coal prices, including increasing domestic coal production, distributing electricity at factories, and securing energy supplies for the winter heating season. [B9N2QE019]

Earlier this week, China took the most daring step in decades of electricity sector reform, enabling coal-fired power plants to pass on high power costs to commercial and industrial end users through market-driven electricity prices. Said it would be.

Beijing was trying to reduce its reliance on coal-fired power by prioritizing cleaner wind, solar and hydropower.

“It’s clear that people will be warm and able to continue their business. Of course, we need to. As an environmentalist, we don’t want to risk changing society against climate change,” he said. Dimitri de Boer, China’s representative of European environmental consultancy Client Earth, said. “But in order to avoid similar situations in the future, it should be combined with the introduction of renewable energy as quickly as possible.”

Local governments in Shanxi Province and Inner Mongolia Autonomous Region, China’s top coal-producing regions, have ordered about 200 mines to increase production, but floods in Shanxi Province, the top coal-producing country, have worsened supply prospects. Analysts expect power shortages and distribution to continue until early next year.

Banks are financing coal mining to help increase production. Shanxi Coking Coal Group, China’s top coal mining hub, received a billion yuan ($ 155.3 million) bank loan to resume operations from the flood, according to a newspaper backed by the Central Bank of China. ..

According to a press conference of the National Energy Administration, daily coal production has exceeded 11.2 million tons, the highest since February, and the average coal inventory at the power plant can support use for about 15 days. [L1N2R90M0]

Official data on Wednesday showed that China’s coal imports rose to its highest level this year last month.

More than half of the region of mainland China, managed by the National Railways Network, has been reducing electricity consumption since last month.

Graphic: China’s electricity distribution map –

The most active January Zhengzhou thermal coal futures rose 3% at 1,608.8 yuan per ton at the beginning of Thursday. Contracts approached record levels on Wednesday, rising more than 200% year-to-date.

Graphic: Global coal prices skyrocket due to surge in electricity usage and tight supply in China –

($ 1 = 6.4392 Chinese RMB)

(Report by Muyu Xu and Shivani Singh in Beijing, additional report by David Stanway, edited by Lincoln Feast)

Cold weather keeps China’s coal prices high, power crisis causes factory inflation

Source link Cold weather keeps China’s coal prices high, power crisis causes factory inflation

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