- China’s moves to increase coal production take time
- European companies are feeling the pinch in global supply
- Czech regulator seeks reassurance on power supply
- Electricity demand increases in times of recovery from pandemic
BEIJING / PRAGUE, Oct. 18 (Reuters) – Power shortages have helped slow China’s economic growth to its lowest level in a year, while soaring coal prices on Monday further threaten Chinese industry and global supply chains.
European companies have reduced their prospects amid global bottlenecks, while European gas prices, still more than 350% higher than at the start of 2021, have forced more electricity supply companies through the region to flex.
The Czech Republic’s energy regulator has taken the exceptional step of requiring suppliers to provide assurance that they can provide electricity to homes and businesses, after another of the electricity groups and of the country’s gas supply has been cut off.
Suppliers from other European markets, including Britain, have also closed in recent weeks due to soaring energy prices.
In Asia, electricity supplier Ohm Energy said on its website that it left the Singapore retail electricity market on Friday, the third company to do so in recent weeks.
To alleviate the Chinese crisis, Beijing has taken a series of measures to increase the production of coal, which powers about 60% of its power plants. But Monday’s data showed those measures were taking time to materialize as demand for electricity continued to soar.
Chinese coal production was 334.1 million tonnes last month, up from 335.24 million tonnes in August and 0.9% lower than a year earlier, according to official data.
This means September production averaged 11.14 million tonnes per day, according to Reuters calculations, compared to figures released by China last week, indicating daily production was over 11.2 million tonnes, barely higher despite Beijing’s efforts.
‘LOSE THE BATTLE’
âThe Chinese government is losing the battle to control soaring coal prices,â said Alex Whitworth, Asia-Pacific energy and renewable energy research manager at Wood Mackenzie.
âDespite efforts to increase the supply of coal, production fell in September due to weather, security and logistical concerns. China has also failed to curb the surge in demand for coal. electricity.”
Data showed that energy constraints contributed to the slowdown in growth in China in the third quarter. The world’s second-largest economy grew 4.9%, its slowest pace since the third quarter of 2020 and down from 7.9% in the second quarter.
Domestic coal shortages have driven up fuel prices for Chinese power producers, forcing unprofitable companies to ration electricity to industrial users and forcing some factories to halt production, disrupting global supply chains.
European businesses are among those feeling the pinch, with the energy crisis adding to challenges including a shortage of memory chips and a lack of shipping containers.
‘FACE WIND TO CONTINUE’
Dutch healthcare tech company Philips (PHG.AS) is the latest to slash its outlook for sales and profit growth in 2021, saying a global shortage of electronic components has affected third quarter results. He was also affected by a recall of breathing apparatus.
âSupply chain volatility has intensified globally,â said CEO Frans van Houten. “We expect this headwind to continue into the fourth quarter.”
Fuel prices remain elevated, with oil trading near three-year highs Monday above $ 85 a barrel and up more than 60% this year.
The European gas benchmark may have fallen from this month’s high, but it is still up more than 350% this year.
Russia, which supplies around a third of Europe’s gas, has said it is ready to pump more, but Russian officials have also said Europe could ease its shortage and searing prices by giving the green light to the project. Nord Stream gas pipeline 2.
The Russian-led pipeline, which will double Russia’s export capacity to Germany via the Baltic Sea, said on Monday it had taken a new step to prepare for start-up.
Approval to start operations, however, could take months for the project, which the United States and some European countries oppose, fearing it will make Europe even more dependent on Russian energy.
Reporting by Kevin Yao, Gabriel Crossley, Muyu Xu and Shivani Singh in Beijing; Maria Kiselyova and Vladimir Soldatkin in Moscow; Bart Meijer in Amsterdam; Jason Hovet in Prague; Jessica Jaganathan in Singapore; edited by Edmund Blair and Jason Neely
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