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China Faces Fresh Heating, Power Shortages

LNG vessel

New heating and electricity shortages are looming over parts of China due to the combination of cold weather and insufficient coal supplies. That’s what four local utilities have warned Beijing about in a letter cited by Reuters.

In it, the utilities ask the government to take steps to increase the supply of coal and put a lid on fast-rising prices. “If the coal inventories don’t rise to a reasonable level by Spring Festival, then it will be really difficult to deal with the drop in temperatures in some key regions and in the winter heating regions,” the companies said.

The situation is dire enough in some parts of the country that there are only supplies for two to three days. At the same time, thermal coal futures have risen by 10 percent since the start of the year, Reuters notes, and so have rail transport costs, aggravating the situation.

The news about the insufficient supply of coal in Asia’s largest economy comes on the heels of a gas shortage that China suffered last month as Beijing ordered several million households plus a number of industrial businesses to switch from coal to gas for heating and electricity in an attempt to reduce pollution.

As a result, gas imports into China reached an all-time high in December as the country fought a very seasonal cold spell amid its efforts to reduce its dependence on coal and replace it with gas. At 7.89 million tons—including pipeline flows and LNG shipments—the December figure beat the previous record, booked in November, by 20 percent.

Local gas producers also pumped natural gas at the highest rate since 2014 last month in an attempt to make up for the shortages of the fuel in the northern parts of the country.

Even so, Beijing was forced to reopen several coal-powered plants in December to make up for the shortages, which helped coal prices continue to move higher.

By Irina Slav for Oilprice.com

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