Chinese supply chains face disruption as energy shortage bites

Chinese supply chains are being affected by factory shut downs as a power shortage has caused several companies to temporarily stop production.

Many regions in the country have been affected by blackouts as the supply of energy is rationed. This has affected both homes and businesses.

Risk analyst Everstream Analytics warned that the shutdowns would affect supply chains. The company has so far tracked disruptions at more than 60 companies and it expects the list to grow.

“Dozens of energy-intensive industries were forced to either reduce or shut down plant operations in multiple provinces across China over the past few days,” the analyst said.

“As authorities started to enforce dual-control policies to limit energy consumption in the country, many energy-intensive sectors began to feel the impacts.

“Among the affected sectors since the beginning of the nationwide crackdown in mid-September were industries ranging from petrochemicals to textile printing and aluminum production.

“In recent days, key suppliers in the automotive and electronics industries have also been forced to suspend production, indicating a widening issue that may have reverberating supply chain impacts in the weeks to come.”

Everstream warned that the situation is likely to be exacerbated during China’s upcoming week long Golden Week holiday that sees factories close.

The shortage comes as the country tries to reduce its use of coal-fired power stations to meet emissions reduction targets.

Meanwhile, demand for Chinese goods has surged as the world tentatively emerges from Covid pushing up electricity consumption, there has been a shortage of coal and prices for gas and coal have increased.