The three largest power producers in China, which account for 44 percent of total generation capacity in the country, swung to losses in the third quarter of 2021 amid soaring coal prices and the state policy of price caps for consumers, Caixin Global reports.
Datang International Power Generation, Huadian Power International, and Huaneng Power International have all recently reported losses for the third quarter, compared to profits for the same period last year.
The main drag on financials of the three major power producers was the price of coal, which had rallied in the past few months to reach record highs just after Q3 ended, before China moved to clamp down on surging prices and trading speculation with coal.
According to Caixin, the average price which power producers paid for thermal coal more than doubled in the third quarter of 2021 compared to Q3 2020, while prices of thermal coal paid by utilities were 32 percent higher between July and September compared to the second quarter of this year.
The soaring coal prices and the energy crisis hit China in the third quarter and continues into the beginning of the fourth quarter. In September, the world’s second-largest economy restricted power use in at least 20 regions and provinces that contribute more than half to the Chinese economy.
Surging coal prices and power shortages in China slowed the growth of its economy in the third quarter and are now threatening to spill over to the global supply chains in the fourth quarter.
China has moved in recent days to squash the surge in coal prices with government intervention, which resulted in a plunge in the price of coal last week.
The energy crisis, however, has spread to diesel supply, and Chinese officials have reportedly met with representatives of state-held and independent refiners to explore ways to alleviate the crunch.