Chinese supply chains face disruption as energy shortage looms
Chinese supply chains are affected by plant closures as a power shortage has prompted several companies to temporarily halt production.
Many parts of the country have been affected by power outages as energy supplies are rationed. It affected both homes and businesses.
Risk analyst Everstream Analytics has warned that the shutdowns will affect supply chains. The company has so far tracked disruptions at more than 60 companies and it expects the list to grow.
“Dozens of energy-intensive industries have been forced to downsize or shut down factories in several provinces of China over the past few days,” the analyst said.
“As the authorities began to implement double-check policies to limit energy consumption in the country, many energy-intensive sectors began to feel the effects.
“Among the sectors affected since the national crackdown began in mid-September were industries ranging from petrochemicals to textile printing and aluminum production.
“In recent days, major suppliers to the automotive and electronics industries have also been forced to halt production, indicating a growing problem that could impact the supply chain in the coming weeks.”
Everstream has warned that the situation is likely to be exacerbated during the coming week of Golden Week in China, which will see factories shut down.
The shortage comes as the country tries to reduce its use of coal-fired power plants to meet emissions reduction targets.
Meanwhile, demand for Chinese products has increased as the world timidly emerges from Covid, leading to increased electricity consumption, there has been a coal shortage, and gas and coal prices have risen.