Wednesday, October 5

China’s Sichuan cuts power supply to industry amid power crunch


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Producers of metals, chemicals and other industrial goods are shutting factories or curbing output in China’s southwestern Sichuan province after it rationed power consumption to ensure sufficient supply to residents.

Industrial users across 19 out of 21 cities in the province were ordered to suspend production from Aug. 15 until Aug. 20 to prioritize residential power supply, according to a notice issued on Sunday by the Department of Economy and Information Technology of Sichuan.

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An official at the department confirmed to Reuters it had implemented power rationing but declined to discuss details.

Sichuan, a production hub of metals such as aluminum and lithium, relies on dams to generate more than 80% of its electricity.

But soaring temperatures and little rain this summer have reduced hydropower generation in the province of 83.75 million, leading to power rationing for industrial users since late July.

The province’s worst heatwave in 60 years is also leading to soaring power demand, said the government-backed Sichuan Daily.

Several cities will see temperatures of 42 degrees Celsius this week, said the China Meteorological Administration which issued a high-temperature alert on Monday.

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Companies including aluminum producer Henan Zhongfu Industrial and chemicals maker Sichuan Guoguang Agrochemical said in stock exchange statements they were suspending production this week.

A lithium major producer has also halted production, analysts at Daiwa Capital Markets said in a note.

Some companies are continuing to operate limited capacity however.

“The power control is very strict,” said a source at a major ferro-alloy producer in the center of Sichuan, which has cut its daily output to 150 tonnes from Monday from a normal rate of 400 tonnes.

(Reporting by Siyi Liu in Beijing and Muyu Xu in Singapore Additional reporting by Beijing Newsroom and Emily Chow Editing by Dominique Patton, David Goodman and David Evans)



financialpost.com