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Chinese cities reportedly go dark as country faces shortage of coal, a major Australian export

Consumption
  • Several major Chinese cities have reportedly gone dark as authorities limit power usage, citing a shortage of coal.
  • Analysts said prices of the commodity in the country have shot up due to the reported crunch and some tie the shortages and blackouts to the unofficial ban on Australian coal.
  • Chinese authorities have not tied the blackouts to tensions with Australia or the coal restrictions. They instead attribute the restrictions on power use to exceptionally high demand and routine maintenance.
View on the Bund, a waterfront area in central Shanghai, which runs along the western bank of the Huangpu River.
View on the Bund, a waterfront area in central Shanghai, which runs along the western bank of the Huangpu River.
Frédéric Soltan | Corbis News | Getty Images

SINGAPORE — Several major Chinese cities have reportedly gone dark as authorities limit power usage, citing a shortage of coal.

Analysts said prices of the commodity in the country have shot up due to the reported crunch. The reports also follow rising trade tensions between Beijing and Canberra, leading some analysts to tie the coal shortages and blackouts to the unofficial ban on Australian coal.

Relations between the two nations soured last year after Australia supported an international inquiry into China’s handling of the coronavirus pandemic. Coal is just one in a growing list of Australian goods that China is targeting, as a result of their escalating row.

Last year, China told its power plants to limit the amount of coal imports from other countries to keep a lid on prices.

Beijing reportedly lifted those restrictions later, but didn’t remove curbs on coal imports from Australia. China also reportedly gave state-owned utilities and steel mills verbal notice to stop importing Australian coal.

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China is the world’s largest coal consumer and its greatest source of coal imports was Australia. Coal is the energy source that the world’s second largest economy predominantly relies on — even as it has committed to a renewable energy plan. China is the second-biggest buyer of Australia’s thermal coal, a variety used to generate power.

Coal restrictions leading to blackouts?

Prices of coal in China have shot up as a result of the shortage and research firm Wood Mackenzie predicts they will remain high during the peak winter demand period.

“China’s thermal coal market is in chaos, with prices rocketing after daily price index releases were suspended on 3 December,” research firm Wood Mackenzie said.

The report said power rationing “has already commenced” in Hunan and Zhejiang provinces due to the shortages, and there is “little scope” for increased production from Chinese producers.

Concerns about the availability of electricity for ordinary Chinese spiked in December. A widely shared online article listed planned blackouts by the Shanghai State Grid for different parts of Shanghai on Dec. 22.

Other regions have also restricted electricity use, the Shanghai State Grid added.

Some cities, primarily those in southern China, have imposed limits on off-peak electricity usage for factories since mid-December, according to a report last week by the South China Morning Post. In the tech hub of Shenzhen, there have been week-long blackouts in different areas, the report said.

It was not immediately clear whether any of the blackouts actually happened, or to what extent.

Senior economist Marcel Thieliant at research firm Capital Economics said the blackouts are “underlining that China is willing to go to great lengths to harm Australia.”

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Chinese authorities have not tied the blackouts to tensions with Australia or the coal restrictions. They instead attribute the restrictions on power use to exceptionally high demand and routine maintenance.

China has used 11% more electricity this December than last year, the National Development and Reform Commission said in December. The department is the country’s top economic planning body.

The commission said the rapid economic recovery, cold winter weather and limited supply have prompted some regions to restrict power use. China’s November coal imports fell 44% from last year, according to data from the Commonwealth Bank of Australia.

As temperatures are set to remain low, the commission said it expects national electricity demand to rise.

A shift in coal flows

China is now turning to alternative sources for coal.

Analysts noted that could lead to a shift in trade flows as Australia’s coal, one of the country’s largest exports, becomes the latest casualty in the trade fight. But experts say the developments will have limited impact on overall demand for Australian coal as it will simply find other markets.

“Trade flows will shift, as Australian coals look for new homes and higher volumes of non-Australia coking coals move to China,” said Wood Mackenzie in a recent note. Coking coals are a variety of coal used to produce steel.

Correspondingly, shifts in other trade flows of coal will occur, with China’s import data showing increased coal imports from Mongolia, Canada and Russia, the research firm said.

Last month, China signed a deal with Indonesia to buy $1.5 billion worth of thermal coal.

Still, China is short of coal, said Wood Mackenzie, with some mills surviving on stockpiles and Mongolian coal prices increasing as the Chinese switch over.

“We suspect that China will continue (and probably intensify) its long-running efforts to reduce reliance on imported coal more generally in the coming years, though it will perhaps take some time to bear fruit,” according to a report by Capital Economics.

Next year, there will still be great pressure on China’s three main coal-producing regions to ensure supply, a national coal industry association said in a Dec. 1 report in the Economic Observer, a Chinese financial news outlet.

But factors such as China’s aim for peak carbon emissions in 10 years give companies less incentive to ramp up production.

CNBC



15 Comments on "Chinese cities reportedly go dark as country faces shortage of coal, a major Australian export"

  1. makati1 on Mon, 4th Jan 2021 11:41 pm 

    “CNBC” says it all…USMSM propaganda site.

    China is going to manage quite well. Shifting gears faster than any Western country can and the shift is from 3rd to 4th, not reverse.

    Read this article before on another site.

    Be patient Amerikans, the brownouts and blackouts are coming to the US…IF you can still pay the electric bill serfs!. If not, they are coming sooner to a home near you. LOL

  2. Outcast_Searcher on Tue, 5th Jan 2021 8:25 am 

    makati1: Says the propaganda spewing clown, bereft of ANY evidence, much less credible citations.

    Wow, I’m soooooooooooo surprised.

  3. Outcast_Searcher on Tue, 5th Jan 2021 8:29 am 

    It would surprise me if there are actually significant blackouts in many major cities due to this.

    This would be self-imposed, and the Chinese generally plan better than to just blatantly punch themselves in the face.

    If it’s marginal and fairly minor, partly to fight against the higher prices until other supplies are secured, that’s no big deal.

    This would seem to be the perfect opportunity for China to make a major push to increase solar and wind, given the economics this is causing, and also of course, the already well known pollution issues.

    If it’s a choice of spend money to modernize and go green or waste lots of money on coal, then the answer SHOULD be obvious. But the way humans work, if a choice is switch coal suppliers and get pricing back to normal (short term thinking), it’s likely easier go that route — for now.

  4. Antius on Tue, 5th Jan 2021 1:01 pm 

    It would appear that wind power isn’t all it cracked up to be.
    https://briefingsforbritain.co.uk/the-costs-offshore-wind-power-blindness-and-insight/

  5. Harquebus on Tue, 5th Jan 2021 2:28 pm 

    China’s problem is, its customers are broke.

  6. Antius on Tue, 5th Jan 2021 4:43 pm 

    China’s coal production has peaked due to exhaustion of its most easily recoverable reserves.
    https://www.sciencedirect.com/science/article/abs/pii/S0301421513001195

    It now faces diminishing returns. Declining cheap energy means a declining economy, unless the Chinese can find (conquer) new reserves. That means global war and an expansionist China that bullies its neighbours. Hard luck Makati. Let’s hope you don’t spend your final years in a Chinese prison camp, working with a gun in your back, for a bowl of rice a day.

  7. makati1 on Tue, 5th Jan 2021 4:50 pm 

    Outcast, when you have been fed bullshit 24/7/365 all of your life, and were told it was chocolate pudding, you would not know better unless you got out of the box and realized the stink. I have been out of the box for 13 years now and I see much more clearly. The US is 3rd world Bangladesh, not the one you think it is.

    But then the stupid, dumbed down, brainwashed Amerikans don’t know any better anyway. The thousands of Americans escaping from the US Gulag every year are the smart ones. Soon the wall will go up and escape will be impossible. Think Berlin Wall.

    Papers please! Er…Vaccine Passport please! Sorry, you have a fever of 98.9 and are quarantined. Go home and lock yourself up until we say you are allowed to try again. No home? Too bad! We have a place for you, showers included. LOL

    https://www.msn.com/en-us/news/us/over-5800-americans-gave-up-citizenship-in-first-half-of-2020-double-the-numbers-through-all-of-2019/ar-BB17JtpU

  8. makati1 on Tue, 5th Jan 2021 4:57 pm 

    Ant, you keep putting me into your bullshit comments. China has all the coal it needs, in Australia. When the Aussies get rid of that asshole they have in power now, they will start selling it to the Chinese again. The Aussies also have to kick the greedy Amerikans out first.

    Why do Westerners have to try to deflect blame for their own failure to another country? The West is going down. Asia is rising. It is China’s century. I’m not worried about the Chinese. I’m more worried that Amerika will do something stupid in its last gasp at power. Like WW3. If it happens oceans will not protect it this time. I hope you are prepared.

  9. makati1 on Tue, 5th Jan 2021 5:06 pm 

    BTW: China can buy more coal from other sources, like South Africa, which are already coal suppliers to China. China is just putting the screws on stupid Australia. Better than bombing them like Amerikans do when they cannot get their own way. Pass the popcorn.

  10. Outcast_Searcher on Wed, 6th Jan 2021 6:06 pm 

    Makati1: Not that you’d recognize anything resembling an education instead of spewing empty BS, no matter what. LOL

    But keep bleating endless nonsense. It makes you JUST as credible as Trump having his cronies rush the Capitol.

    To people with some education, it’s embarrassing. In THAT — we do look like the third world countries I remember from watching TV as a teen.

    At least in that distorted derivative of reality, you are right. Not that I’d expect your ilk to actually know what derivative really means.

  11. FamousDrScanlon on Wed, 6th Jan 2021 10:07 pm 

    Mak you’re a total fucking fantasist.

    A country either has enough natural resources or it doesn’t.

    China doesn’t.

    End of story.

    So as per usual you are convinced you’re 100% right, BUT BUT BUT BUT FIRST:

    “China has all the coal it needs, in Australia. When the Aussies get rid of that asshole they have in power now, they will start selling it to the Chinese again. The Aussies also have to kick the greedy Amerikans out first.”

    Have those things happened? NO Can you prove they will? NO.

    SO? So STFU & stop barking out your speculation as fact & stop pretending you know things you have no way of knowing.

    13 whole years (vs how many in the USA?) away from the USA – except for the monthly US welfare cheques & return visits & daily obsessive reading & commenting on the USA – yep, other than that you’ve totally escaped dude.

    Tell yourself old man.

    You’ll never escape your exceptionalist indoctrination & toxic cultural imprinting by changing location. You are the same American asshole as most of those in the home country. You clearly share the national disease – often wrong, but never uncertain.

    You could move to Mars Mak & it won’t change a thing because wherever you go, there you are.

    If you had really given up on America & Americans, you would not be online all day America watching-N-bashing & you most certainly would not still be dragging around all that anger-rage towards her & the sheeple.

    The truth is, the hardest part of walking away/letting go is not a physical thing. Sometimes moving can help a little – give one a bump, but the geographical ‘cure’ is a myth.

  12. makati1 on Wed, 6th Jan 2021 10:33 pm 

    Guys, I obviously have more intelligence and education than the two of you put together.

    I could refute ALL of your baseless allegations with tons of refs but it would be a waste of time. I doubt either of you can read and comprehend anything beyond the 3rd grade levels.

    I am enjoying decades of retirement in a free country, and enjoying the SS you send to me every month. Over $240,000 since 2008. That, with my other income streams lets me live, stress free. I am currently looking out at a green world with flowers, butterflies and birds everywhere. What are you looking out at? LOL

    BTW: Amerika imports most of what it needs…from Asia, China in particular. Without the East, the US would be lost. It produces nothing but bullshit and lies.

    Trade balance between Asia and the US last year was ~$420,000,000,000.00 in Asia’s favor, the lowest in many years.

    https://www.census.gov/foreign-trade/balance/c0016.html

    The US needs Asia or it will not last long. Read labels guys. Even the electronics you use came from Asia.

  13. makati1 on Wed, 6th Jan 2021 10:51 pm 

    BTW: Keep the “stimulus” checks coming. They help to prepare for the coming crash and end of Amerika. Instant exchange to Philippine Pesos and locked in a safe place, until spent on preps. Nice to be retired and an adult, independent family. No worries.

  14. Sissyfuss on Fri, 8th Jan 2021 3:31 pm 

    Beautiful, clean coal. Why say more.

  15. Sissyfuss on Fri, 8th Jan 2021 3:35 pm 

    Beautiful clean coal, who could ask for anything more.

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