Yangtze Floods Swamp China’s Coal Demand

Yangtze Floods Swamp China’s Coal Demand

2019-07-25T08:51:59+00:00July 25th, 2019|Water Energy|

Stockpiles are a record high when they should be shrinking. A surge in hydropower may be the explanation.Look at the coal yards surrounding China’s power plants and you’ll notice something strange happening.

Typically at this time of year, stockpiles of the fuel that provides about two-thirds of the country’s power should be shrinking. Peak season for thermal power generation is July and August when cities switch on their air conditioning, along with the coldest months of winter. That causes generators to run down supplies of coal waiting to be burned.

That’s not happening this time around. Weekly stocks at the country’s six biggest power generators hit a record high of 18.4 million metric tons the week before last, according to data compiled by China Coal Resource. As a proportion of consumption, that equates to about 30 days of supplies, at a time of year when the ratio is normally dropping below 20.

China is seeing headlong growth in wind, nuclear and solar power as well as natural gas, but hydro is the most important challenger to coal, accounting for almost a fifth of generation compared with about 10% for wind, nuclear and solar put together. As a result, all that water backed up in reservoirs and needing to be discharged before more rains come means that hydro is likely to eat into coal’s share of the market until levels start to subside later in the year.

Lump of Coal

Even as output has remained flat, thermal power has fallen from about 80% of China’s generation mix to around 70% over the past five years

That’s a very bad sign for generators’ appetites, especially as the China National Coal Association is forecasting that imports are going to weaken in the second half of the year. “Demand isn’t booming as it’s supposed to,” Su Chuanrong, executive director-general of group, told Bloomberg News last week.

One explanation can be found in the floods that have affected almost 20 million people across the country in recent weeks. After a run of dry years, China’s hydroelectric dams are filling up. Already in March, hydro generation had grown almost 22% from a year earlier, the fastest pace in four years. Last month, output was 113.6 billion kilowatt-hours, a record for June.

Source : https://www.bloomberg.com/opinion/articles/2019-07-23/china-s-floods-boost-hydropower-damp-coal-demand