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Caixin

South China faces manufacturing curbs amid power shortages

Ramped up factory activity and hot weather strain energy supplies

Factories like this one in Guangdong Province are facing power supply interruptions as hot weather, low rivers and increased industrial activity overload power generation facilities.   © Reuters

Factories in South China's manufacturing hub of Guangdong Province were told by power suppliers to cut electricity usage by curbing operations, as rising power consumption amid hot weather strains the region's power system.

Since mid-May, 17 cities like Guangzhou, Zhuhai and Dongguan have limited power usage. A local power supplier in Dongguan, home to thousands of factories manufacturing products from diapers to clothing to cellphone parts, said off-peak power consumption measures will last till the end of the year.

Factories in some parts of Guangdong can only operate four days out of the week.

As the pandemic ebbs, increased industrial activity and hot weather have seen a surge in power usage. Sporadic interruptions to electricity and the resulting production cuts will hinder the nation's economic recovery.

Neighboring Guangxi and Yunnan provinces also face power shortages. Between May 25 and May 30, Guangxi is expected to have seen a maximum demand of 27 million kW -- 11% more than supply capacity, according to a power supply plan issued by the province's industrial department.

Yunnan, a big supplier of hydroelectricity, has imposed limits on power usage since May 10, according to the province's energy bureau. Some electrolytic aluminum factories have faced production declines, Caixin learned.

A circuit board manufacturer in Huizhou, Guangdong Province, said it was notified by an electricity supplier on Monday that power will be cut off during certain times three days this week, which will affect deliveries. The company said it has leased generators to continue operating.

Guangdong is expected to have a peak power demand of 133 million kW in May, as much as 11 million kW more than supply capacity, Caixin learned.

A severe shortage of water during the dry season in April and May has also constrained hydropower production. Water flow in the Lancang and Jinsha rivers, home to a number of large hydropower plants, is 20% to 30% less than during the same period last year. Daily power production at the plants is 20 million kW less than the expected capacity.

Surging coal prices have also raised the cost of generating electricity at coal-fired power plants and limited their production.

The price of Chinese 5,500 kcal thermal coal rose nearly 60% to almost 1,000 yuan ($157) per ton in the past two months. At that price combined with operating costs, coal-fired power plants can hardly make a profit, which has reduced their willingness to replenish coal stocks, said Shi Dongsheng, a market analyst at a coal-fired power plant in Guangdong.

Luo Guoping contributed to this report.

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Read also the original story.

Caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Nikkei recently agreed with the company to exchange articles in English.

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