Power Chaos As More Snow Hits Central, Eastern & Southern China

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Chinese New Year passenger travel discouraged in favor of energy supplies – more heavy snowfalls forecast 

February 4th  – China continues to have problems with its worst winter weather for 50 years as further heavy snow hit already stressed cities and towns in much of the country. With the military already deployed and tanks on the roads in some areas to assist with snow and debris clearance, power shortages threaten anew as raw materials such as coal and coke have been delayed in getting to power plants. Rail rolling stock has been diverted away from the normal passenger transit duties as this time of year, with Chinese New Year’s eve just 36 hours away, in order to allow reasonable chances of the power supply being maintained. Up to 60% of all passengers are now expected to stay put rather than travel back to their homes, effectively missing Chinese New Year celebrations with their families. A record number of over 42,000 rail container trucks laden with coal and coke were transported just today (Monday) alone to ensure national power supplies could be maintained – over 25% more than the norm at this time of year. Both army and civilian maintenance crews were also working around the clock to repair broken or damaged power lines in Guangdong, Guizhou and Henan Provinces, where millions of people have been without power for over a week.

Several energy intensive metal producing plants have also been ordered to shut down to conserve fuel, with the aluminum and steel industries worst hit, a situation reflected in the world’s trading bourse, the London Metal Exchange, where futures contracts have shown sharp increases in value and the daily trading rate have shot up by more than 10% in the past few days for these commodities as shortages loom. The supply chain knock-on effect has also led to several auto manufacturers in China to either close or reduce capacity as sheet metals are not reaching their production lines. Nissan, Honda, Toyota, Ford and Mazda have all closed some or all of their plants.  

With China possessing so much internal migrant labor, Chinese New Year, which falls on February 7th, is a traditionally busy time for domestic travelers to go home and stay with families, for many the only chance they may have each year to see loved ones. Accordingly the government is acting fast to ensure wherever possible, Chinese families are, if not able to be reunited during this time, at least kept warm and in contact with TV and telephone, and are doing so at the expense of the commercial considerations of keeping certain government-invested strategic industries on line. This follows on from moves as we reported three weeks ago to cap the prices of basic food commodities in face of growing inflation to ensure at least, wherever possible, China enjoys an admittedly snowy and chilly, but peaceful New Year of the Rat.

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