China’s Vice-Premier Han Zheng said during an emergency meeting earlier this week that the country’s top state-owned energy companies must secure supplies of coal, natural gas, crude oil, and electricity at all costs to ensure availability for this winter, according to sources familiar with the matter. The central government will not tolerate power blackouts, the sources added. Separately, Premier Li Keqiang has pledged to make every effort to maintain growth and ensure the basic livelihood needs while keeping the stability in the industry and supply chains.
Thermal coal futures on the Zhengzhou Commodity Exchange settled up 4.2% on Thursday to an all-time high of CNY1,408 ($218) per ton. The contract has climbed 96% since July, its biggest increase since January-March 2017. Some provinces have already rationing power to industrial users and even households amid a coal shortage. China’s power crunch has triggered rallies in commodities such as fertiliser and silicon.
Analysts said the emergency meeting highlights China’s worry about the ongoing energy crisis. Beijing’s call for more fuel supplies could further intensify the volatility in the energy markets. It could also mean that European governments and consumers would have to deal with even higher energy prices as they have to compete with Chinese buyers for supplies.
