Efforts by Beijing to tackle the country’s ongoing power shortages have been thwarted as floods in Northern China hit major coal production centres hard, resulting in increased coal prices.
Heavy rainfall also forced the closures of 60 coal mines in the Shanxi province, China’s largest coal mining hub, further worsening the coal crisis.
The price of thermal coal futures which is used primarily to generate power increased to an all-time high on Monday by as much as 12% to 1,408 Yuan ($219) per metric ton.
The extreme weather hit just as China is seeking to tackle power shortages by ramping up coal production and allowing coal-fired power stations to charge more for electricity.
Energy shortages have spread to 20 Chinese provinces in recent weeks, forcing the government to ration electricity during peak hours and compelling some factories to suspend production. This in turn is weighing on China’s economic outlook.
