All the energy turmoil of China. Report Ft
China tried to stabilize coal prices, but gasoline and diesel prices shot up. The in-depth analysis of the Financial Times
China's efforts to alleviate the energy crisis by stabilizing volatile coal prices have been complicated by soaring costs of wholesale gasoline and diesel, forcing service stations to ration fuel, the Financial Times writes.
The energy crisis has intensified pressure on Beijing ahead of this weekend's COP26 climate summit in Glasgow.
China's economic planning agency said Thursday it had met with energy companies to "set standards" to combat "excessive profits," raising expectations that the government could set new price limits for coal.
The caps would follow the government's limits on energy prices for industrial and retail users that have exacerbated electricity shortages in recent months.
But the surge in wholesale gas and diesel prices, which have risen nearly 20 percent in the past month, has led to widespread rationing in recent days, according to state media. Wholesale fuel prices now exceed government-set retail prices, building financial pressure on refineries and service stations.
The shortages of coal and gasoline have highlighted China's dependence on carbon-based fuels, although Beijing reiterates its commitment to ambitious environmental goals ahead of the COP26 summit.
President Xi Jinping wants China to achieve carbon neutrality by 2060, with emissions peaking by the end of this decade. Last year, China accounted for more than half of global coal consumption.
The National Commission on Development and Reform, the state economic planning agency that has been considering measures to control skyrocketing coal prices, said Thursday it would send inspection teams to the mines. Coal prices rose to Rmb2,000 per ton in some regions this month.
The high prices and strict limits imposed on coal-fired power generators made it impossible for many producers to operate profitably, worsening the energy crisis that quickly spread across the country in September. The State Council, the Chinese cabinet, said it would allow generators to sell more electricity at market prices.
Thermal coal contract prices traded on the Zhengzhou Commodity Exchange fell to their lowest level in more than a month on Thursday, falling 13% to Rmb1,033 per ton.
Jack Shang, an investment analyst at Citibank, said the price caps would make it difficult for domestic coal miners and importers to meet demand through the winter months. China's coal imports increased 76 percent year-on-year in September.
"There will be increased energy rationing for the manufacturing sector during the winter, resulting in weaker demand for steel and non-ferrous metals," Shang said.
About 90% of China's coal supply comes from domestic producers, and central planners have called for 153 mines to expand production. The NDRC said this month that average daily coal production rose to 11.5 million tons, nearly 10 percent higher than in September as power plants expanded their coal stocks.
On Wednesday, the NDRC said it would maintain a "zero tolerance" approach to "regions and companies that have not strictly implemented the requirements for coal supply and price stability."
China's energy challenges are intensifying at a difficult time for the world's second largest economy. While the government is on track to comfortably surpass its annual growth target of at least 6 percent, quarterly data reveals that momentum is slowing.
The Chinese economy grew only 0.2% in the third quarter compared to the previous three months, its lowest growth in at least a decade.
Coal and fuel shortages also fueled soaring producer prices, which rose by a record 10.7% in September. But consumer price inflation remains subdued, rising just 0.7% last month.
Growth in consumption has been hampered by the government's “zero Covid” approach to the coronavirus pandemic, which imposes draconian test regimes and closures even during outbreaks that are moderate by global standards.
(Extract from the foreign press review by Epr Comunicazione)
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/cina-crisi-energetica-prezzi-carbone-carburante/ on Sun, 31 Oct 2021 07:11:34 +0000.