Chinese Electricity Rationing Hits Factory Production

Sep 28, 2021 | Article, News

Global supply chains are facing further disruption as a significant shortage of electricity in many parts of China has required authorities to ration power supplies. Factories across the country’s manufacturing heartlands are being forced to temporarily reduce or suspend production – particularly in sectors deemed to be non-essential. Many businesses already suffering from sky-high shipping costs and an acute shortage of ocean transport capacity are now having to contend with a winter of production delays and disruptions.

Part of the so-called ‘power crunch’ derives from a surge in demand for electricity across China’s manufacturing base – particularly in the Guangdong, Jiangsu, Shandong and Zhejiang provinces – as the nation emerges from Covid-related lockdowns. China is also at the very peak of its summer energy consumption.

With a shortage of coal supplies and tougher emissions standards, meeting this spiralling demand with adequate supply has proven increasingly difficult. China’s National Energy Administration (NEA) and the State Grid Corporation of China are having to balance the requirements of the country’s powerhouse (but power hungry) economy with the fundamental needs to keep peoples’ homes lit and heated – particularly in China’s northernmost cities where night-time temperatures are edging towards freezing.

Energy intensive industries have been hard hit by the power cap being imposed on businesses, with steel, aluminium and cement industries particularly affected. Suppliers to companies such as Apple and Tesla have also reported production disruption.
Understandably, estimates as to when the 2021 power rationing order will end remain fluid as central authorities work with local governments to monitor and control supply. Some rationing could end in a matter of days while some areas may face power rationing throughout the winter.

Uniserve is advising its customers to stay in close contact with all supply chain partners and to contact their Customer Development Manager for updates or to discuss any concerns.

For more information, please call 01375 412 331 or email info@ugroup.co.uk

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