China Coal Prices Soar To Record As Winter Freeze Spreads Cross The Country
One week ago we discussed why the “worst case” scenario for China’s property crisis is gradually emerging; to this we can now add that China’s worst case energy crisis scenario is also about to be unleashed as cold weather swept into much of the country and power plants scrambled to stock up on coal, sending prices of the fuel to record highs.
Electricity demand to heat homes and offices is expected to soar this week as strong cold winds move down from northern China, according to Reuters with forecasters predicting average temperatures in some central and eastern regions could fall by as much as 16 degrees Celsius in the next 2-3 days.
Shortages of coal, high fuel prices and booming post-pandemic industrial demand have sparked widespread power shortages in the world’s second-largest economy. Rationing has already been in place in at least 17 of mainland China’s more than 30 regions since September, forcing some factories to suspend production and further disrupting already broken supply chains.
On Friday, the most-active January Zhengzhou thermal coal futures closed at a record high of 2,226 per tonne early. The contract has risen almost 200% year to date.
China’s three northeastern provinces of Jilin, Heilongjiang and Liaoning – also among the worst hit by the power shortages last month – as well as several regions in northern China including Inner Mongolia and Gansu have started winter heating, which is mainly fuelled by coal, to cope with the colder-than-normal weather.
…click on the above link to read the rest of the article…
