Shares of power producers slipped as investors shifted into cyclical stocks. China is struggling with widespread power shortfalls, dealing a blow to the recovery of the second-largest economy and risking disruption to global supply chains and heightened inflationary pressure around the world.
The power crunch, on a scale unseen in more than a decade, highlights how some of Beijing's changing policy priorities, including its effort to limit carbon emissions, can ripple through a global economy that has been reshaped by the pandemic. The shortages reflect a combination of factors.
Coal prices have surged because of a shortage of domestic coal supplies, made worse by import cuts from Australia and Mongolia. That has prompted power stations to reduce output to avoid losses because of official caps on their selling prices.
Meanwhile, from the top, Beijing is seeking to enforce energy-efficiency targets, leading to officially sanctioned reductions in energy usage by some industries. At the same time, demand for electricity has soared since the end in April 2020 of China's pandemic-induced shutdown, as factories increased production to meet rising consumer demand in the West.
Write to Amy Pessetto at amy.pessetto@dowjones.com
(END) Dow Jones Newswires
10-01-21 1712ET
