SINGAPORE--An expected hike for power prices in China could take its toll on the country s petrochemicals industry and set back its recovery after the Olympics, sellers and buyers said on Monday.
Electricity tariffs were raised by yuan (CNY) 0.05 ($0.01) per kilowatt hour (kWh), or 5%, from 20 August by Beijing and these hikes were expected to hit home soon in the form of higher power charges for end-users, a trader based in south China said.
According to the China Electricity Council, thermal coal prices at Qinhuangdao, one of the country's major ports for coal delivery, increased by CNY300/tonne between April and June.
This surge drove the country s main power providers such as Huaneng and China Power Investment into losses this year.
The country s petrochemicals industry was hit with a slew of measures imposed by the Chinese government to ensure the success of the recently concluded Beijing Olympics, which resulted in production cuts.
This year has been nothing but a long-running saga of bad news. A lack of export orders has already reduced our margins and this rise in power prices is going to further increase our operating costs, said a polyester maker based in east China in Mandarin.
He added that there was talk of electricity tariffs being raised by as much as 10% from September and this could trigger further plant closures in a year when China s petrochemicals industry had been grappling with high feedstock costs, credit issues and poor demand from overseas markets.
I heard the government will likely hike electricity price in the second half of this year and if so, our production costs will increase again, a melamine producer in southwest China said in Mandarin.
We have to pin our hopes on an improvement in downstream demand otherwise we could resort to a shutdown to preserve our margins, he added.
Producers with their own power generators had little reason to cheer on the back of high transportation costs for fuels such as coal and gas.
The coal prices have increased very fast. Now, we are paying nearly CNY1,000 for one tonne of coal, but in June it only cost around CNY800/tonne, a producer in Tianjin said in Mandarin.
I am not sure if the electricity prices will be hiked next, but without a doubt, energy costs are increasing this year, adding fuel to the fire amid poor domestic demand, he added.
China s National Energy Administration which oversees the management of the country s energy sectors could not be contacted for comment.
Coupled with checks by power companies from today to maintain the electricity grid and equipment in industrial zones, some plants took the opportunity to extend their shutdowns in August to maintain their margins in view of rising energy costs.
Why swim against the current when it makes more sense to go with the flow? If we re going to have to shut down to accommodate the power checks, then we might as well plan for a longer turnaround period, said a polyester producer with facilities in Shanghai and Suzhou in Mandarin.
He added that the extended shutdown from August would enable his staff to concentrate on selling their current high inventory of material while the time could also be used to maintain the plant s machinery.
Electricity tariffs were raised by yuan (CNY) 0.05 ($0.01) per kilowatt hour (kWh), or 5%, from 20 August by Beijing and these hikes were expected to hit home soon in the form of higher power charges for end-users, a trader based in south China said.
According to the China Electricity Council, thermal coal prices at Qinhuangdao, one of the country's major ports for coal delivery, increased by CNY300/tonne between April and June.
This surge drove the country s main power providers such as Huaneng and China Power Investment into losses this year.
The country s petrochemicals industry was hit with a slew of measures imposed by the Chinese government to ensure the success of the recently concluded Beijing Olympics, which resulted in production cuts.
This year has been nothing but a long-running saga of bad news. A lack of export orders has already reduced our margins and this rise in power prices is going to further increase our operating costs, said a polyester maker based in east China in Mandarin.
He added that there was talk of electricity tariffs being raised by as much as 10% from September and this could trigger further plant closures in a year when China s petrochemicals industry had been grappling with high feedstock costs, credit issues and poor demand from overseas markets.
I heard the government will likely hike electricity price in the second half of this year and if so, our production costs will increase again, a melamine producer in southwest China said in Mandarin.
We have to pin our hopes on an improvement in downstream demand otherwise we could resort to a shutdown to preserve our margins, he added.
Producers with their own power generators had little reason to cheer on the back of high transportation costs for fuels such as coal and gas.
The coal prices have increased very fast. Now, we are paying nearly CNY1,000 for one tonne of coal, but in June it only cost around CNY800/tonne, a producer in Tianjin said in Mandarin.
I am not sure if the electricity prices will be hiked next, but without a doubt, energy costs are increasing this year, adding fuel to the fire amid poor domestic demand, he added.
China s National Energy Administration which oversees the management of the country s energy sectors could not be contacted for comment.
Coupled with checks by power companies from today to maintain the electricity grid and equipment in industrial zones, some plants took the opportunity to extend their shutdowns in August to maintain their margins in view of rising energy costs.
Why swim against the current when it makes more sense to go with the flow? If we re going to have to shut down to accommodate the power checks, then we might as well plan for a longer turnaround period, said a polyester producer with facilities in Shanghai and Suzhou in Mandarin.
He added that the extended shutdown from August would enable his staff to concentrate on selling their current high inventory of material while the time could also be used to maintain the plant s machinery.
