BEIJING PRAGUE Reuters - The power shortages had helped drive China's economy to its slowest in a year, while rising coal prices on Monday threatened more pain for Chinese industry and global supply chains.
Companies in Europe have trimmed outlooks amid global bottlenecks, while European gas prices, still more than 350% higher than at the start of 2021, have forced more power supply companies across the region to buckle.
The Czech Republic's energy regulator took the remarkable step of asking suppliers to provide confidences that they could supply clean air to houses and companies after another of the country's electric and gas groups stopped supply.
Suppliers in other European markets, including Britain, have also folded because of the recent price surge.
On its website in Singapore, power provider Ohm Energy said that it exited the retail electricity market in Asia on Friday, the third company to do so in recent weeks.
To ease the China crisis, Beijing has taken a string of steps to boost output of coal, which fuels approximately 60% of its power plants. However, in the data of Monday morning, it showed that those steps took time to feed through, while demand for power continued to surge.
That means September output averaged 11.14 million tonnes a day, calculated by Reuters, compared with figures released last week by China that daily output was more than 11.2 million tonnes - just slightly higher despite Beijing's efforts.
The Chinese government is losing the battle to control soaring coal prices, said Wood Mackenzie's Alex Whitworth, head of Asia Pacific power and renewable energy research.
Despite efforts to increase coal supply, output fell due to weather, safety and logistics challenges in September. Neither has China succeeded in reining in China's booming power demand. Data showed power constraints contributed to slowing growth in China in the third quarter. The world's second largest economy grew 4.9%, its slowest pace since the third quarter of 2020 and was down from 7.9% in the second quarter.
Shortages of domestic coal have caused fuel prices for China power generators higher, causing unprofitable firms to ration power to industrial users and forcing some factories to suspend production, disrupting global supply chains.
The energy companies are among the ones whose production was affected by the weight of the budget adding to challenges including a shortage of memory chips and a lack of containers.
Health technology firm Philips is the latest to trim its outlook for sales and profit growth in 2021, saying a global shortage of electronic components had hit third-quarter earnings. It was also hit by a recall of respiratory devices.
The supply chain volatility of global retailers has intensified, CEO Frans van Houten said. The headwind will continue to do so in the fourth quarter. Fuel prices remain high with oil trading near three-year highs on Monday above $85 a barrel and more than 60% this year. O R The European gas benchmark is still rise from this month's peak, but it has declined more than 350% this year.
Russia, which supplies nearly a third of Europe's gas, has said it is prepared to pump more but European officials have also said that Europe could ease its supply crunch and red-hot prices by giving a greenlight to the Nord Stream 2 gas pipeline project.
The Russian-based pipeline, which will double Germany's exported capacity to Russia via the Baltic Sea, said on Monday it had taken a further step to prepare for the start-up.
Aproval to begin operations, however, could be months away for the project which the United States and some European countries oppose, concerned it will make Europe even more reliant on Russian energy.