China orders top energy companies to secure supplies at all costs

China’s central government officials ordered the country’s top state-owned energy companies — from coal to electricity and oil — to secure supplies for this winter at all costs, according to people familiar with the matter.
 
The order came directly from Vice Premier Han Zheng, who supervises the nation’s energy sector and industrial production, and was delivered during an emergency meeting earlier this week with officials from Beijing’s state-owned assets regulator and economic planning agency, the people said, asking not to be named discussing a private matter. Blackouts won’t be tolerated, the people said.
 
Chinese coal futures on Thursday surged to a record as the country grapples with shortages of the fuel ahead of a week-long holiday. Prices have more than doubled this year amid soaring electricity demand from factories and slow output growth from mines.

 

The emergency meeting underscores the critical situation in China. A severe energy crisis has gripped the country, and several regions have had to curtail power to the industrial sector, while some residential areas have even faced sudden blackouts. China’s power crunch is unleashing turmoil in the global commodities markets, fueling rallies in everything from fertilizer to silicon.
 
Calls to the state council went unanswered outside business hours.
 
Government-owned power giants State Power Investment Corp. and China Energy Investment Corp. echoed Han’s words in WeChat statements Thursday night, promising to do all they can to ensure coal and electricity supply for the winter. “We will go all-out to fight the tough battle of energy supply,” the nation’s top coal miner CEIC said in its statement.

 
Volatility in the energy markets is poised to intensify on the order from the central government, said Bjarne Schieldrop, chief commodities analyst at SEB.
 
China’s statement “to me implies that we are in no way on a verge of a cool-off. Rather it looks like it is going get even more crazy,” he said. “They will bid whatever it takes to win a bidding war for a cargo of coal” or liquefied natural gas.
 
Russia doubles electricity exports to China to help ease power crunch
 
Russia's electricity exports monopoly Inter RAO said on Friday that it would double its October supplies to China after a request from the world's No.2 economy as it grapples with power cuts.

 
China is scrambling to deliver more coal to utilities to restore supply, as nearly two-thirds of Chinese provinces struggle with power rationing. The three northeast provinces of Liaoning, Heilongjiang and Jilin - home to nearly 100 million people - have been particularly hard hit.
 
Official tells grid firms to prioritise residential users amid power crunch
 
A top official of China's state-asset regulator said on Friday the county's power supply situation remains challenging and urged grid firms to prioritise residential use and ensure safe operation as winter approaches, said the State Grid Corporation of China (SGCC).