China warns of power outages in key cities

Finance | Agencies and staff reporter 21 Jul 2021

Key Chinese cities have warned that homes and factories may face new power outages as historic demand and supply shortages strain energy grids.

Populous centers including Beijing and Xi'an have alerted electricity users there will be scheduled disruptions as grid operators struggle to maintain overloaded networks. Eleven provinces including eastern manufacturing hubs and landlocked central China, which also suffered outages during last winter's cold spell, reported record demand and peak-load surges last week, according to the State Grid Corporation of China.

The nation's electricity providers are experiencing similar pressures seen in the United States and other hot spots worldwide as temperatures reach alarming levels during the early weeks of summer.

Exacerbating the situation in China is a strong economic rebound from the pandemic, which helped spur a 10 percent surge in power consumption last month.

The heat waves and increased power demand are putting further pressure on the coal industry, China's main energy source.

Thermal coal futures climbed to as high as 926 yuan per ton yesterday, approaching an intraday record of 944.2 yuan set in May, as supply concerns grow.

China's top market regulator, the National Development and Reform Commission, has vowed a massive buildup of coal reserves.

It sent a notice to the six biggest state-owned power firms requiring them to restock enough coal for more than seven days by July 21 to prevent unplanned blackouts. The policy paper, which has been circulating since Monday, suggests to traders that the high demand will last until mid-August.

Meanwhile, China's central bank will support Shanghai to roll out pilot schemes to exchange yuan and explore the free flow of capital in the Lingang free-trade zone, according to Wang Xin, head of the People's Bank of China's research bureau.

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