Mon, October 11, 2021,
BEIJING, Oct 11 (Reuters) - China's largest provincial economy in its northeast rust belt warned of worsening power shortages on Monday, despite government efforts to boost coal supply and manage electricity use in a post-pandemic energy crisis hitting multiple countries.
China's Liaoning province issued its second-highest level power shortage alert on Monday, the fifth in two weeks, warning the shortfall could reach nearly 5 gigawatts (GW).
Liaoning has the biggest economy and consumes the most power of the three provinces making up China's rust-best industrial region. It has been suffering widespread power cuts since mid-September. A level two power shortage alert indicates a demand gap of 10%-20% of total power demand.
The rebound in global economic activity as coronavirus restrictions are lifted has exposed shortages of fuels used for power generation in China and other countries, leaving industries and governments scrambling as the northern hemisphere heads into winter.
"The biggest power shortage could reach 4.74 gigawatts (GW) on Oct 11," a notice issued by the Liaoning Provincial Industry and Informatization Department said.
An order to curb power use had been put in place from 6 a.m. (2200 GMT on Sunday), it said.
The province also issued level two power crunch alerts for each of the last three days of September, when the daily power supply gap reached as much as 5.4 GW, leaving hundreds of thousands of households without electricity and forcing industrial plants to suspend production.
The power shortages follow tightening supply and sky-rocketing prices for coal, used to generate more than 70% of electricity in the region. Wind farms have also been idled due to slow wind speeds. Wind power made up 8.2% of Liaoning's power generation in 2020.
Last week, China's top two coal mining regions, Shanxi and Inner Mongolia, ordered more than 200 of their mines to expand production capacity and prioritise coal supply to power plants in northeastern provinces, including Liaoning.
Analysts and traders, however, expect coal output will still fall short this winter, and China would still have to cut industrial power consumption by about 12% in the forth quarter.
China's thermal coal futures rose 8% to hit a daily upper-trading limit shortly after trade started on Monday.
Moody's Investors Service in a report said: "China's electricity cuts will add to economic stresses, weighing on GDP growth for 2022. And the risks to GDP forecasts could be larger as disruptions to production and supply chains feed through." (Reporting by Muyu Xu and Shivani Singh; Editing by Tom Hogue)
China Eyes Kazakh Coal As Energy Demand Soars
Editor OilPrice.com
Sat, October 9, 2021
China is the world’s biggest coal consumer. Neighboring Kazakhstan sits on some of the world’s biggest coal reserves. Yet they have never done much business trading the stuff, largely because it is expensive to move by rail.
That may be about to change.
Rolling blackouts caused by a coal shortage are threatening China’s economy. Gummed-up supply chains, the post-COVID consumption boom, and emissions-reduction targets are all to blame. But Beijing also miscalculated last year, imposing an informal ban on products from Australia, one of its largest coal suppliers, when Canberra called for an independent investigation into the origins of COVID-19.
Coal prices have risen almost fourfold over the last 12 months, the Wall Street Journal reported this week, reaching record highs.
Now China is looking for new sources, willing to brave even the most indirect import channels.
The eastern Chinese province of Zhejiang received its first shipment of Kazakh thermal coal (the kind used in power plants) this week.
The delivery route was anything but optimal. Landlocked Kazakhstan first sent the coal at least a thousand kilometers in the wrong direction, overland to a Black Sea port in Russia. There a bulk carrier took on 136,000 tons for a 30-day, a 15,000-kilometer odyssey to Zhejiang, Bloomberg reported.
“China as a whole has been buying more thermal and coking coal from Kazakhstan since the start of the year, as power cuts have become more frequent and coal supplies dwindle,” the South China Morning Post reported on October 5.
But how much coal China buys from Kazakhstan is something of a mystery. Figures the two sides provide to the UN's international trade statistics database do not match
Whereas Kazakhstan reported shipping 28.5 million kilos of coal to China in 2016, China reported receiving only 10.5 million. In 2019, the last year for which complete data is available, Kazakhstan told the UN that it had sold China 39 million kilos; China said it bought 150 million kilos.
Political scientist and sometimes opposition leader Petr Svoik is inclined to believe the higher figures, explaining that Kazakh customs officials have been playing with data on commodity sales to China for years.
"There are several reasons” for the inconsistencies, Svoik told Eurasianet. “On the one hand, they have different methods of accounting for commodity groups. On the other hand, there is corruption and smuggling.”
Transparency Kazakhstan, the local branch of the international anti-corruption watchdog, has reported on such data discrepancies with other countries as well, also blaming graft in the customs agency.
There is one thing the data agree on: Kazakh coal is a drop in the bucket for China, which imported 308 million metric tons in 2019, according to the IAE, three times Kazakhstan’s total production. (China is also the world’s largest coal producer.)
But for Kazakhstan, which is struggling to wean itself off the climate-warming fuel, its neighbor's crisis creates new opportunities. For now, 90 percent of coal mined in Kazakhstan is used locally, where it is sold at state-regulated prices, which are one-third lower than export prices.
As Kazakhstan switches from coal to gas and some renewables to meet its emissions targets, it will free up coal supplies to sell abroad, the Association of Mining and Metallurgical Enterprises, a lobby group, told the Kursiv business newspaper on October 4.
With higher coal prices, sending this dirtiest of fuels straight across the border by rail becomes more economical, even if the net warming effects on the global climate remain the same.
By Eurasianet.org
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