Steeling for power shortages
By Richard Fu |
May 17, 2011, Tuesday
|
Print Edition
Print Edition
CHINA'S steel industry will face widening power shortages this summer, but oversupply will remain domestically, an industry group said yesterday.
"Steel companies are highly energy-intensive consumers, so they will definitely become the targets of electricity supply restrictions and rationing, and the impact on steel output and downstream steel users won't be negligible," the China Iron and Steel Association said in a statement.
Power shortages have emerged in parts of China well before the summer season largely due to high coal prices and regulated electricity prices, reinforcing fears that regional power rationing could affect industrial activities as the government has to guarantee supplies to ordinary consumers.
Shanghai-based Baoshan Iron and Steel Co yesterday said it has agreed to face power curbs during the peak summer consumption period after discussions with local industrial regulators last week.
Analysts don't expect the power crunch to sharply affect big mills such as Baosteel, which typically have captive power plants in place.
The Ministry of Industry and Information Technology last week called on industries that consume high energy and suffer overcapacity to cap their demand for power as it warned of widening gap in power supply in the coming months.
The industrial sector accounts for 70 percent of China's total electricity demand, the ministry said.
But the steel industry will still face a domestic supply glut due to rapid production growth and a weak export market - the result of falling demand in overseas markets, the appreciation of the yuan and rising trade protectionism.
The association also said the domestic steel sector will face rising financing pressure amid the government's monetary tightening measures.
"Steel companies are highly energy-intensive consumers, so they will definitely become the targets of electricity supply restrictions and rationing, and the impact on steel output and downstream steel users won't be negligible," the China Iron and Steel Association said in a statement.
Power shortages have emerged in parts of China well before the summer season largely due to high coal prices and regulated electricity prices, reinforcing fears that regional power rationing could affect industrial activities as the government has to guarantee supplies to ordinary consumers.
Shanghai-based Baoshan Iron and Steel Co yesterday said it has agreed to face power curbs during the peak summer consumption period after discussions with local industrial regulators last week.
Analysts don't expect the power crunch to sharply affect big mills such as Baosteel, which typically have captive power plants in place.
The Ministry of Industry and Information Technology last week called on industries that consume high energy and suffer overcapacity to cap their demand for power as it warned of widening gap in power supply in the coming months.
The industrial sector accounts for 70 percent of China's total electricity demand, the ministry said.
But the steel industry will still face a domestic supply glut due to rapid production growth and a weak export market - the result of falling demand in overseas markets, the appreciation of the yuan and rising trade protectionism.
The association also said the domestic steel sector will face rising financing pressure amid the government's monetary tightening measures.
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