China’s energy shortage further exacerbates supply
Current situation: “China’s Power Problems Expose a Strategic Weakness China announced on Wednesday a national rush to mine and burn more coal, as the country’s electricity shortage threatens to damage its image as a reliable manufacturing base.”


Image: Swarajyamag.com

1. Current situation

Oct. 13, 2021

     “China’s Power Problems Expose a Strategic Weakness China announced on Wednesday a national rush to mine and burn more coal, as the country’s electricity shortage threatens to damage its image as a reliable manufacturing base.”

     “Regulators have ordered Chinese banks to provide plenty of loans to the coal sector.”

     “Depending on how much coal can be mined and burned soon, China’s electricity shortage could call into question whether Beijing can deliver in the coming months the strong economic growth that China’s people have come to expect.”

     “Chen Long, a co-founder, and partner of Plenum, a Beijing economics, and politics research firm. “They have to cut energy-intensive industries.”

     “During a severe cold snap last December, some cities ran short of coal and curtailed factory operations, turned off streetlights and elevators, and limited heating of offices.”

Source: Keith BradsherNew York Times / Li You & Claire Fu contributed research.

2. Cause of energy crisis

Sept. 21, 2021

     Every million tonnes of coal has recently been costing China’s steel mills more than US$400 million, compared with around US$250 million paid by steel mills everywhere else.

     “The difference is entirely explained by China’s embargo on Australian coal.”

     “But they were hit by a succession of supply shocks.”

     “A series of fatal accidents have forced the closure of many Chinese coal mines.”

     “With the Chinese steel industry under orders to keep production this year to no more than the 1.06 billion tonnes produced last year, there’s competition among customers to secure supplies, which is pushing steel prices higher.”

Source: David Uren, ASPI

3. China makes use of banned AU coal

Oct. 06, 2021

     “China is releasing Australian coal from bonded storage, despite a nearly year-long unofficial import ban on the fuel, as it scrambles to ease a national power crunch stemming from a coal shortage, traders familiar with the matter said.”

     “Top economic planner the National Development and Reform Commission did not immediately respond to a request for comment.”


Source: Kpler | China thermal coal imports by the supplier

     "Without resuming Australian coal imports, the supply shortage will be here to stay for some time, as it takes time to boost domestic production after nearly 5 years of output curbs," said a third Beijing-based trader.”

     “The shortage will last at least through the fourth quarter and possibly till after February or March when the heating season ends."

     “China imported 197.69 million tonnes in the first eight months of 2021, down 10% on the year.”

     “But August coal imports rose by more than a third on tight domestic supplies.”

Source: Chen Aizhu, Reuters

Lofty Construction Index - August 2019, 2020, and 2021 (Construction Permits)
The number of permits issued in the US, New England, and Texas from January to August in 2019, 2020, and 2021