Chinese factories Capacities going down because of power cuts

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Can you imagine life without electricity?  It sounds like a joke for most Chinese. But it is taking place in many areas of China now. Residents in North-east China have been experiencing unannounced power cuts since 23rd Sep. Lifts and traffic lights stop working; The light show for the coming National Day in Shenzhen is to be canceled in order to save some electric power. All the people are questioning what is happening to China?

Shenzhen is canceling the National Day Light show to save power

Main cause for the power cuts

Fast growing Industrial producing capacity

Currently, very few countries can keep producing and delivering cargoes worldwide like China does, especially when southeast Asia is severely affected by Delta. A great many orders have no choice but to go to China. Statistics show that China exporting volume has increased 33.7% in the first eight months than the same period of 2019. Manufacturers have to add new production lines, prolong working hours to deliver orders on time. These add great pressure to China’s electricity supply.

Coal Price mounting

Coal power occupies 60.8% of all the electricity generated in China. However, coal price has risen 56.8% than the same time of 2020, about CNY 1079 per ton. It means generating enterprises are losing money for each KWH produced. Besides, these enterprises are state-owned. The government does not allow them to increase electricity prices which have been CNY 0.46/KWH (0.07usd) for years.

Coal source gets less, electricity needs go up

Where in China is cutting power ?

The following provinces are cutting power: Guangdong, Zhejiang, Jiangsu, Liaoning, Jilin, Heilongjiang.

Red arrows show power cutting areas

Terrible News for Vinyl Flooring manufacturers.

Lead time gets longer.

Working hours are shortened. Workers can only work 4 days a week. All the factories’ capacities are half decreased. Meanwhile, decor film factories, wear layer suppliers are all in Jiangsu Province, faced with the same situation, which adds more uncertainties to lead time.

Vinyl Floor Prices are risen largely

PVC SG5, made from coal in China, is the main material of SPC floor, LVT floor, and WPC floor, going up to CNY 11575/T by 29th Sep 2021, which was CNY 9360/T  one month ago, an immediate increase of 24%.

Interesting Ideas: Will sea freight go down after China’s Coal & Electricity reduction policy?

When Chinese factories can not produce goods or do not have enough goods to load, will Shipping companies such as Maersk, Matson, or Cosco cut their prices? After all, the sea freight is too high. So China’s coal & electricity reduction policy is not that bad!

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