Searing heat tests china's ability to keep its factories running

Highlights 

• Nationwide electricity generation hit a record high last week

• Coal stacks up at the Mongolian border due to virus curbs

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A persistent heatwave is hobbling China's ability to keep its factories operating as virus curbs disrupt the supply of coal and inventories of the fuel run low.

The government's pledge to prevent a repeat of the power outages that crippled industry last year is being sorely tested by the summer heat. As the world's biggest producer and consumer of coal, China is proving to be both a victim and a contributor to a climate emergency that has brought an extended bout of scorching weather across the globe, reports Bloomberg.

The nation's electricity generation hit a record high last week as demand for air-conditioning quickly depletes its stockpiles of coal, which at some coastal power plants have fallen to an alarming level of just 10 days' usage, according to a note from consultant Fenwei Energy Information Service Co.

After heavy rains brought a brief respite, another week or so of searing heat is forecast for the industrial heartlands of the southeast. That could include temperatures as high as 42 degrees Celsius (108 degrees Fahrenheit) in Zhejiang province, the manufacturing hub that borders Shanghai, which is already struggling to supply enough power to factories and households. 

Shopping malls and office buildings have been told to turn off lighting and restrict elevator usage to save power, according to the local energy administration. The move comes after the grid started rationing at energy-intensive textile mills in order to meet peak demand. 

Eleven provinces have sent alerts to industrial users for "orderly consumption" that would limit supply when air-conditioning demand jumps. Among the affected regions, Jiangsu has already cut power to just 20% of normal levels in some places, and threatened to switch off electricity to factories consuming excessive amounts, according to industrial news outlet Chemical Fiber Group.   

Utilities are struggling with costs as coal prices rise, shying away from spot purchases in the hope that the government will force miners to offer more discounts, Fenwei Energy said. The strains on the industry are already evident, with coal-power generator Huaneng Power International reporting that its net loss in the first half of the year could climb to as high as 3.24 billion yuan ($480 million), after recording a profit a year ago. 

At the same time, coal imports from Mongolia have stacked up at the border due to disruptions caused by China's Covid Zero policy, with as much as 2 million tons being held at the Ganqimaodu crossing, according to Fengkuang Coal Logistics.