Many areas in south China have experienced persistent heavy rains for nearly a month, leading to flooding which threatens economic activity and weighing on coal consumption. According to China’s ministry of water resources, floodwaters had surpassed warning lines in at least 13 rivers in the southwestern regions. The meteorological administration on June 30 issued a rainfall alert for the 29th successive day.
The floods have affected at least 26 administrative regions with 13.74 million people at risk and 10,000 homes destroyed, the central government said. The government estimates that the floods incurred damages worth CNY27.8 billion ($3.9 billion).
Heavy rain and flooding have affected China’s cement industry, a large consumer of thermal coal. At the same time, the flood boosted hydropower output. The new Wudongde hydropower station in Sichuan province entered service on June 29. It can produce up to 38.91 TWh/year of electricity, that can potentially wipe out coal demand by 12.2 million tons/year in South China, according to market participants’ estimate.
However, rising temperature in parts of north China and the southeast coastal regions has increased air-conditioning use and hence, slowed down the fall in coal consumption. Combined coal burn at six major coastal utilities in China was up slightly from 631,000 tons/day a week ago to 638,400 tons/day on June 29.
