Chinese coal prices held near record highs recently as cold weather swept into the country’s north and power plants stocked up on the fuel to ease an energy crunch that is fueling unprecedented factory-gate inflation.
A widening power crisis in China, caused by shortages of coal, record-high fuel prices and booming post-pandemic industrial demand, has halted production at numerous factories.
Soaring energy prices helped send the producer price index (PPI) to its highest in at least 25 years in September, rising 10.7% year-on-year, official Chinese data showed.
Producer prices have risen due to output curbs caused by a power crunch at a home and a months-long global commodity price rally. But Chinese businesses have been reluctant to pass on the higher costs to local customers due to already soft orders.
The three northeastern provinces of Jilin, Heilongjiang and Liaoning, among the worst hit by the power shortages last month, and several regions in northern China including Inner Mongolia and Gansu, have started winter heating, which is mainly fueled by coal, to cope with the colder-than-normal weather.