Power shortages accelerated this week in China and will impact industrial production, exports and consumption in the coming weeks, while pushing up producer prices as well. The worst of the impact on output will emerge in the September data, as power cuts in many provinces specifically targeted by the NDRC for exceeding energy consumption targets will ease in October. However, rising coal prices and weaker coal output could contribute to ongoing power shortages later in the winter as well.
Thermal coal production appears to be rebounding at government direction, which will help to support coal inventories at power plants. But localities will continue to struggle to meet overall energy consumption targets in the years ahead, so China may face reoccurring power shortages in the future.
