Coal prices in China set a record high as the Middle Kingdom has tried in vain to resurrect its once-dominant economy in the face of COVID-19, cold weather and a power crunch, reported the Epoch Times.
Coal prices are going parabolic in China, with futures climbing 110% since Sep 1 to almost 2,000 yuan per tonne today (~$300). Coal for prompt delivery in the physical market is trading much higher. To put it in context, Newcastle and Richards Bay coal trades ~$230 per tonne pic.twitter.com/hrotNxlv1f
— Javier Blas (@JavierBlas) October 19, 2021
“Power rationing has been in place in at least 17 of mainland China’s more than 30 regions since September, forcing some factories to suspend production, disrupting supply chains, and adding to factory gate inflation concerns,” said the publication, a frequent critic of the Chinese Communist Party.
China, the world’s largest energy consumer, is engaged in a frantic effort to increase coal production even as the state has taken control over more of the economy in the eight years under current president Xi Jinping.
“The Chinese government is losing the battle to control soaring coal prices,” said Alex Whitworth, head of Asia Pacific Power and Renewables Research at Wood Mackenzie according to Reuters.
“Despite efforts to increase coal supply, output fell in September due to weather, safety and logistics challenges,” he continued. “Neither has China succeeded in reining in booming power demand.”
While the 1.4 billion population of China presents the country’s economy with large opportunities, it comes with the burden of having to power it.
“The electricity crunch has also laid bare one of China’s strategic weaknesses,“ said the New York Times.
“It is a voracious, and increasingly hungry, energy hog,” the newspaper added. “China has also emerged as the world’s largest emitter of greenhouse gases by a wide margin, thanks mainly to its already heavy dependence on coal.”
That’s may be why Xi last week canceled plans to go to the Cop26 climate summit in the U.K.
“In a setback to the ambitions of the Cop26 summit, the prime minister has been advised by diplomats that Xi is not expected to join more than a hundred other world leaders, including President Biden,” said the U.K.’s Times newspaper.
The energy shortages in China are causing effects globally “risking disruption to global supply chains and heightened inflationary pressure around the world,” according to the Wall Street Journal.