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China Extends Power Curbs As Heatwave And Drought Persist

China has extended orders for industries to shut down production for five more days as heatwaves and extreme drought in its southwestern regions have boosted electricity demand while reducing hydropower production in the largest hydropower-generating province.

The heatwave in the Sichuan province and the rest of southwestern China is now in its 11th day of constant alerts from authorities. In scorching temperatures, residential power demand has soared. But the heatwave and the worst drought in six decades have depleted hydropower reservoirs in the major hydro electricity-generating province of Sichuan. As a result, authorities are imposing power curbs and reducing working hours at shopping malls to conserve electricity.

In Sichuan, hydropower generation from the Yangtze River is falling, and factories are closing to ease the pressure on the grids.

The heatwave is reducing water levels on the Yangtze River to the lowest on record for this time of the year, threatening power supply in the Sichuan province, which relies on hydropower generation for a large portion of its electricity supply. Sichuan also typically sells hydropower-generated electricity to other provinces.

Not only is China’s Sichuan province a major hydropower producer, but it also hosts many factories that produce polysilicon and process lithium—two key components of the solar and battery industries, respectively. The power shortages and factory halts will tighten the market for these materials and drive prices higher, analysts say.

The drought and heatwaves are so extreme that the province ordered last week all factories to close for six days in order to help ease the pressure on the power supply.

Initially, the closures had to last until August 20, but the authorities have extended the suspension of power to industries in Sichuan until August 25, business news outlet Caixin reported on Monday. The provincial government in Sichuan issued on Sunday the highest possible emergency alert on a shortfall in power supply, Caixin said.    

By Charles Kennedy for Oilprice.com

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  • George Doolittle on August 22 2022 said:
    I'm remain truly gobsmacked by the ability of commodity speculators to sustain current pricing as it's truly hard to imagine the entire World running out to buy six year priced Tesla Model 3s at the moment...and that is the price with buyers still buying the entire Tesla now six figure of SX3Y plus the Big S now (semi) too all now capable of being benchmarked against all the other pure BEV vehicles out there at the moment which are *LEGION* in the USA.

    Anyhow not long the Aussie Dollar despite seemingly this energy and resource news being the best ever for that the *ULTIMATE* in resource plays.

    That should give speculators pause but it never does.

    Breville might be a good play should such a type of unwind as I have proposed for some time now continue to play out for 2022.

    Long the Woolworth Building in Lower Manhattan.
    Strong buy.

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