Negative Impact on Industrial Production... 16 out of 31 Locations Under Local Provincial Government Electricity Distribution System
[Asia Economy Beijing=Special Correspondent Jo Young-shin, Reporter Park Byung-hee] "As of September 16, coal stockpiles at major power plants in Guangdong Province, China, stand at 2.4 million tons, nearly 60% lower than the same period last year." This was reported by Caixin, a Chinese economic media outlet, on the 28th while explaining the coal shortage situation in China. Citing a report from Xindai Securities, Caixin stated that as of the 23rd, coal stockpiles in eight coastal provinces totaled 17.742 million tons, down 8.68% from the previous week. It added that the available coal stockpile only lasts for 9.3 days.
Caixin described the coal stockpile volume as a microcosm that directly reflects the overall coal supply and demand situation in China, pointing out that the coal supply issue is unlikely to be resolved in the short term. Accordingly, the power shortage in China is expected to persist for a considerable period, impacting Chinese industry and the economy. Overseas investment banks have already begun to revise down China's economic growth forecasts.
According to Bloomberg on the 27th (local time), China International Capital Corporation (CIC) warned that the power shortage will reduce China's economic growth rate by 0.1 to 0.5 percentage points in the third and fourth quarters of this year.
CIC predicted that the power shortage will particularly affect short-term production, expecting the industrial production growth rate in September (year-on-year) to fall to around 4 to 4.5%. China's industrial production growth rates were 6.4% in July and 5.3% in August.
Nomura Holdings lowered its forecast for China's economic growth rate this year from 8.2% to 7.7%. Lu Ting, a Nomura economist, warned that "the power shortage in China is being overshadowed by Evergrande Group's liquidity issues, causing the market to ignore the impact of the power shortage," and suggested that the economic growth rate could be lowered further from 7.7%. Morgan Stanley also predicted that if the current production cuts continue, the GDP growth rate in the fourth quarter could decrease by about 1 percentage point.
According to Hong Kong's South China Morning Post (SCMP), China is implementing electricity rationing in 16 out of 31 provincial governments due to the power shortage. Some industries are experiencing operational impacts due to power restrictions. In the northeast region, traffic signals have suddenly gone dark due to electricity shortages, and shops have reportedly been operating by candlelight.
The power shortage in China appears to have occurred amid a surge in electricity consumption and insufficient coal supply. Caixin, citing data from the National Energy Administration of China, reported that from January to August, China's electricity consumption reached 5.47 trillion kWh, a sharp increase of 13.8% compared to the same period last year. During the same period, the operating hours of thermal power generation facilities increased by 9.53% year-on-year to 2,988 hours.
Caixin analyzed that China has suspended imports of Australian coal since October last year and is importing coal from alternative countries, but actual coal import volumes have remained stagnant. Caixin pointed out that the power shortage is a result of a supply-demand imbalance where coal supply falls short of demand.
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