Monday , October 3 2022

In China, coal prices have reached record levels, and the early winter cold is exacerbating energy problems



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Fishermen swim near the power plant of the State Development and Investment Corporation (SDIC), Tianjin, China, October 14, 2021. REUTERS / Thomas Peter

  • The price of thermal coal in China has reached a record high
  • Power reform comes into force
  • Cold winds from the north cover central and eastern China
  • China’s Met Office predicts a sharp drop in temperature

BEIJING, Oct. 15 (Reuters) – China’s energy crisis engulfed much of the country on Friday, with power plants trying to stockpile coal and pushing fuel prices to record highs.

As strong cold winds from northern China come down, the demand for electricity to heat homes and offices is expected to increase this week. Weather forecasters predict that the average temperature will drop to 16 degrees in some central and eastern regions in the next 2-3 days.

Coal shortages, high fuel prices and rising industrial demand after the pandemic have led to widespread energy shortages in the world’s second-largest economy. Since September, restrictions have been imposed on at least 17 of China’s more than 30 regions, forcing some factories to suspend production and disrupt supply chains.

The most active January Zhengzhou thermal coal futures hit a record high of 1,669.40 yuan ($ 259.42) per tonne at the beginning of Friday. The contract has increased by more than 200% so far.

The three northeastern provinces of Jilin, Heilongjiang and Liaoning – the regions most affected by power shortages last month – and many regions in northern China, including Inner Mongolia and Gansu, have begun winter-fired coal-fired heating to fight the cold. -normal weather conditions.

Beijing has taken a number of measures to curb coal price increases, including increasing local coal production and cutting off energy-intensive industries and some factories during periods of peak demand. It has repeatedly assured users that power supply will be provided for the winter heating season. B9N2QE019 Read more

But energy shortages are expected to continue through early next year, with analysts and traders forecasting a 12% drop in industrial energy consumption in the fourth quarter due to declining coal supplies and local governments favoring residential consumers.

Reuters Graphics

Earlier this week, China took the boldest step in decades of energy sector reform, saying it would allow coal-fired energy prices to fluctuate by up to 20% from base levels from October 15, giving higher production costs to more commercial and industrial end users. read more

Producers of steel, aluminum, cement and chemicals are expected to face higher and more volatile energy costs under the new policy, squeezing profit margins. Thursday’s data showed that factory door inflation reached a record high in September. read more

Temperatures in northern China have fallen below normal and warming has risen amid declining electricity.

China aims to be “carbon neutral” by 2060, and Beijing is working to reduce its dependence on polluting coal energy for cleaner wind, solar and hydropower. However, coal is expected to meet most of its electricity needs for some time.

China is not the only nation struggling with energy shortages and power outages in some countries. The crisis has highlighted the difficulty of reducing the global economy’s dependence on fossil fuels as world leaders seek to step up efforts to combat climate change at talks in Glasgow next month.

In a video message at the Russian Energy Week International Forum, Deputy Prime Minister Han Zheng said that China will try to reach carbon peaks by 2030, the state-run Xinhua news agency reported on Thursday.

He also said that China and Russia are important forces leading the energy transition and must ensure the smooth progress of major oil and gas pipeline and nuclear energy projects.

(1 dollar = 6.4351 Chinese yuan renminbi)

Information about Shivani Singh in Beijing; Additional interviews by Aizhu Chen, Muyu Hu and the Beijing Newsroom; Edited by Kim Coghill

Our Standards: Thomson Reuters Principles of Trust.

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