Power rationing and forced cuts to factory production in China are widening amid electricity supply issues and a push to enforce environmental regulations.
The curbs have expanded to more than 10 provinces, including economic powerhouses Jiangsu, Zhejiang and Guangdong, the 21st Century Business Herald reported yesterday. Several companies have reported the impacts of power curbs in filings on China’s stock exchanges.
Local governments are ordering power cuts as they try to hit targets for reducing energy and emissions intensity. The country’s top economic planner last month flagged nine provinces for increasing intensity this year amid a strong economic rebound from the COVID-19 pandemic.
Meanwhile, record high coal prices are making many power plants unprofitable, creating supply gaps in some provinces, the Business Herald reported. If those gaps expand, the effect could be worse than power curtailments that hit parts of the country during the summer.
In Zhejiang, about 160 energy-intensive companies in the textile, dyeing and chemical fiber industries have been ordered to halt production to meet energy consumption targets, the Caixin media group reported.
Emergency power cuts were also ordered across 14 cities in Liaoning Province after the grid suffered supply shortfalls, a notice on the local grid operator’s social media said on Thursday.
“Power suppliers will spare no effort to keep providing electricity to residents, hospitals, schools, radio, TV, telecommunications, transportation hubs and other important users,” the notice said.
Yunnan province is canceling price discounts for aluminum smelters. The discounts made power costs about 16 to 22 percent cheaper than the industry average, a separate Caixin report said. Yunnan Aluminum Co (雲南鋁業公司)last week said its production through the rest of the year is to be significantly cut due to the controls.
The CSI 300 Utilities subgauge is up 19 percent this month, hitting the highest since late 2015 this week amid tight supply. Huaneng Power International Inc (華能國際) and GD Power Development Co (國電電力發展公司) are up at least 40 percent this month, leading on the subgauge, while smaller power stocks such as Zhongmin Energy Co (中閩能源) and Shanghai Electric Power Co (上海電力) have added at least 70 percent.
The power curbs are also affecting agriculture, forcing the shutdown of several plants that crush soybeans into oils used in salad dressings and margarine, AgriCensus reported.
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