Chinese manufacturers are caught in a widespread power crunch. Small- and medium-sized businesses said they are turning to diesel generators or suspending operations. One of them said it lost money from hiring diesel generators and would unlikely to survive for more than five days. Since last week, over 100 firms have notified stock markets of production halts, although some have said they restarted production in the last two days.
Reuters reported that the northeastern provinces of Liaoning, Heilongjiang, and Jilin experienced their worst power outages in years. The power outages came amid tight coal supply and soaring prices of the fuel. 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 the first quarter of 2017.
At the same time, the China Coal Industry Association said it was “not optimistic” about supplies ahead of winter. It had urged miners to boost output and prioritize sales to smaller, high-energy consumers. Analysts at China International Capital Corporation said regulators were reluctant to approve new coal capacity following a series of mining accidents. Meanwhile, coal imports plunged 10.3% year-on-year in January-August 2021 and were unlikely to rebound through the end of the year.
