China’s policies and impacts of electricity and production restrictions in various regions.
Source: My steel Sep27, 2021
ABSTRACT: Many provinces in China are affected by the peak period of electricity consumption and the “dual control of energy consumption”. Recently, the electricity load in many places has increased sharply. Some provinces have adopted electricity curtailment measures. The production of energy-consuming industries such as steel, nonferrous metals, chemical industry, and textiles has been affected to some extent. Production reduction or discontinuation.
Analysis of the Reasons for Power Limitation:
- Policy aspect: In August this year, the National Development and Reform Commission directly named nine provinces at a regular press conference: Qinghai, Ningxia, Guangxi, Guangdong, Fujian, Xinjiang, Yunnan, Shaanxi, and Jiangsu. In addition, the reduction rate of energy intensity in 10 provinces did not meet the schedule requirements, and the national energy conservation situation is very severe.
Although there is still room for growth in China’s energy consumption before the carbon peak in 2030, the higher the peak, the more difficult it will be to achieve carbon neutrality in 2060, so carbon reduction actions must start now. The “Plan for Improving the Dual Control System for Energy Consumption Intensity and Total Volume” (hereinafter referred to as the “Plan”) proposes that dual control of energy consumption intensity and total volume is an important system for the Party Central Committee and the State Council to strengthen ecological civilization construction and promote high-quality development. Sexual arrangements are an important starting point to promote the achievement of carbon peak and carbon neutral goals. Recently, many places have begun to curtail electricity, and the goal of dual control of electricity consumption and energy consumption is also to comply with the general trend of carbon neutrality. - Power consumption has increased dramatically: Affected by the new crown epidemic, except for China, major production countries around the world have experienced factory shutdowns and social shutdowns, such as India and Vietnam, and massive overseas orders have poured into China. Due to the soaring demand, the prices of commodities (such as crude oil, non-ferrous metals, steel, coal, iron ore, etc.) have skyrocketed.
The rise in commodity prices, especially the explosive growth of coal prices, has a fatal impact on my country’s power generation companies. Although my country’s hydropower, wind power, and photovoltaic power generation have made great progress in recent years, thermal power is still the main force, and thermal power mainly depends on Coal and bulk commodity prices increase the cost of power generation companies, while the national grid’s online price has not changed. Therefore, the more power generation companies produce, the greater the loss, and limited production has become a trend.
The production capacity of steel raw materials dropped sharply:
- Under the influence of the recent tightening of “dual control” measures in various places, the production capacity of steel raw materials has also been greatly reduced. Some analysts believe that the field of raw materials will further raise prices.
- “The requirement of’dual control’ leads to a certain degree of price increase in the raw material market, which is actually a relatively normal phenomenon. The key lies in how to make the impact of price increases on the market less obvious and truly achieve a balance between production and supply.” Jiang Han said .
- “Dual control” will affect some upstream companies and reduce their output. This trend should be considered by the government. If the output is controlled too tightly and the demand remains unchanged, then prices will rise. This year is also quite special. Due to the impact of the epidemic last year, the demand for energy and electricity has rebounded relatively high this year. It can also be said to be a special year. In response to the “dual control” goal, companies should prepare in advance, and the government should consider the impact of relevant policies on companies.
- In the face of the inevitable new round of raw material shocks, electricity shortages, and possible “off-tracking” phenomena, the state has also taken measures to ensure supply and stabilize prices.
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- Since the beginning of this year, the repeated epidemics and the complicated trend of commodity prices have caused the steel industry to face multiple problems. Temporary measures to restrict electricity and production may cause market turbulence in related industries.
- From the perspective of the macro environment, the country’s carbon neutrality and carbon peaking policies are regulating energy-consuming enterprises to promote market transformation. It can be said that the “dual control” policy is an inevitable result of market development. Related policies may have a certain impact on steel companies. This impact is a pain in the process of industrial transformation and a necessary process for steel companies to promote their own development or transformation.
Post time: Sep-27-2021