Cold Snap Pressures China's Limited Coal, Gas Supplies

Source:

"Conditions for thermal coal supply and shipment do not allow for optimism"

Cities across eastern and central China are rationing power for industry and urging residents to limit gas use after a wave of icy weather sent energy demand soaring while straining supplies of coal that were already tight.

Daytime temperatures in Shanghai and across the nearby coastal provinces of Jiangsu and Zhejiang skidded close to 0 degrees Celsius (32 F), and many areas inland were hit by snow or sleet, according to meteorological departments.

The harsh weather has pushed energy demand to new peaks, while transport snarls have slowed coal supplies, already low as power and coal companies haggle over prices.

The confluence of soaring demand, transport snarls and brinkmanship over coal prices could force power cuts and upset production in some big economic provinces, if conditions worsen.

"Conditions for thermal coal supply and shipment do not allow for optimism," said the China Electric Power News, mouthpiece of the State Electricity Regulatory Commission.

"In central and eastern China, power plants' inventories of thermal coal remain as tight as they were at the end of last year, and already strained shipment of coal has suffered more hardships after being hit by the snow storms."

Power authorities have said they should be able to surmount the strains by expanding transmission between regions rationing the power and gas use by thousands of factories, with limited disruption to the broader economy.

The energy strains are only partly a consequence of the recent cold snap. Demand for power was already running high as quickening economic growth pushed up factory production.

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