The flood season has arrived in China causing torrential rains that lead to severe overflowing in at least 148 rivers, with South China suffering the worst condition, the water resources ministry said on June 11. The flooding is expected to disrupt economic activity and increase hydropower generation, which in turn, can weigh on coal consumption, despite the approaching peak summer demand season.
Southern provinces such as Guangxi and Guangdong experience heavy flooding, with authorities expecting torrential rain to worsen in the coming days while raising warning to code blue. Rainfall in other southern provinces such as Fujian, Hunan, Guizhou, Jiangxi, and Zhejiang reached 100 millimetres during June 1-9. Rainfall in coastal provinces even reached as high as 300 millimetres during the same period, according to official estimates.
The cement industry, an important coal consumer, faces disruptions amid heavy downpours in South China. However, utility companies are expected to continue purchases of coal, albeit at a slower pace. Coal inventories at six flagship coastal utilities were reportedly at 15.39 million tons, 1 million-3 million tons below the typical stocks during the summer months.
