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24/11/2024
Sunday
THIS DAY IN HISTORY:
24 November 
1970 The United States and the USSR ratified the nuclear non-proliferation treaty.
1970 The Central Committee of CPSU restored the national autonomy of the Kalmyks, Karachais, Balkars, Chechens and Ingush.
1970 Charles Darwin published The Origin of Species - the first edition was sold out in a day.
24 November
1970 The United States and the USSR ratified the nuclear non-proliferation treaty.
1970 The Central Committee of CPSU restored the national autonomy of the Kalmyks, Karachais, Balkars, Chechens and Ingush.
1970 Charles Darwin published The Origin of Species - the first edition was sold out in a day.
Chinese energy companies concerned about bankruptcy due to rising coal prices
The energy industry in China has become hostage to the unprecedented decisions of the country's leadership, which has decided to sell part of the oil from its strategic reserves. In terms of imports of hydrocarbons, the Celestial Empire is ahead of all countries in the world, and in terms of oil consumption, it is in second place. This dependence on foreign supplies to keep the economy afloat puts energy security at the center of government policy decisions.
As the Chinese economy began to revive, the demand for the energy products has increased and the prices have risen sharply. As CNN Business reports, ‘the Inflation is skyrocketing and the country's producer price index hit a 13-year record last month. This is due to the rise in commodity prices’. The country's government has already warned that the significant costs of raw materials (energy and petrochemicals) will exacerbate the employment problems faced by manufacturers, especially small and medium-sized businesses.
Coal accounts for over 50 percent of China's energy balance. The recent squabble with Australia has already made the supply of coal to China a big problem. In fact, an unofficial Australian coal embargo resulted in power outages across China in early 2021.
Now, several coal-fired energy groups are asking the Chinese government to raise electricity tariffs. The fact is that Chinese coal-fired power plants, by law, cannot raise prices by more than 10% in the event of an increase in operating costs. Last year, the regulator banned them from raising prices.
The petition echoes a letter sent by 11 coal companies in August. In it, they reported that coal prices in July 2021 increased by 65.3% compared to the prices in July 2020. This led the enterprises to losses, bringing them closer to bankruptcy. Now the analysts are debating how far China's authorities will have to go to contain the impending collapse. This may require easing measures against Australia by lifting the unofficial moratorium on the coal imports. And this is not to mention the fact that Beijing needs to fulfill international climate obligations related to limiting harmful emissions.
As the Chinese economy began to revive, the demand for the energy products has increased and the prices have risen sharply. As CNN Business reports, ‘the Inflation is skyrocketing and the country's producer price index hit a 13-year record last month. This is due to the rise in commodity prices’. The country's government has already warned that the significant costs of raw materials (energy and petrochemicals) will exacerbate the employment problems faced by manufacturers, especially small and medium-sized businesses.
Due to the skyrocketing demand for electricity, some provinces in China are already experiencing catastrophic power shortages.
Against this background, coal prices began to rise. As noted by Oilprice.com, Chinese energy companies face the real possibility of bankruptcy.Coal accounts for over 50 percent of China's energy balance. The recent squabble with Australia has already made the supply of coal to China a big problem. In fact, an unofficial Australian coal embargo resulted in power outages across China in early 2021.
Now, several coal-fired energy groups are asking the Chinese government to raise electricity tariffs. The fact is that Chinese coal-fired power plants, by law, cannot raise prices by more than 10% in the event of an increase in operating costs. Last year, the regulator banned them from raising prices.
Chinese coal-fired power plants are calling on government officials to help them survive.
The Beijing Electricity Association sent a letter to officials demanding higher electricity tariffs earlier this month. ‘The five electricity suppliers in the first seven months of 2021 suffered losses ranging from 20 million yuan ($ 3.1 million) to 192 million yuan’, reported the South China Morning Post last week.The petition echoes a letter sent by 11 coal companies in August. In it, they reported that coal prices in July 2021 increased by 65.3% compared to the prices in July 2020. This led the enterprises to losses, bringing them closer to bankruptcy. Now the analysts are debating how far China's authorities will have to go to contain the impending collapse. This may require easing measures against Australia by lifting the unofficial moratorium on the coal imports. And this is not to mention the fact that Beijing needs to fulfill international climate obligations related to limiting harmful emissions.
23.09.2021
