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China’s return is upsetting energy markets as the sudden shift from Covid Zero shades industry upends the standard flow of commodities.
The China Silicon Industry Association in a statement on Wednesday said, a dramatic surge in infections is having a short-term impact on the supply chain for solar companies,.
Many manufacturers of the wafers used in solar panels are curtailing operations, with a few producing at just 60 percent to 70 percent of capacity, it said.
The supply shock comes at the tail end of a record-breaking year for solar installations in China. To keep the virus at bay and keep up production, some renewables firms such as Longi Green Energy Technology Co. are operating closed loops in their factories.
The rampant spread of the virus is also affecting the coal markets. The production of coking coal used by the steel industry as reported by Mysteel has halved in the top mining hub of Shanxi, with 10 mines suspending output and another 31 cutting back.
While miners have put workers in closed loops, Mysteel warns that the impact could last for about another two weeks until the outbreak wanes.
For thermal coal, abandoning strict virus controls has improved supply logjams, which could mean that China escapes the shortages that typically afflict the economy during peak winter demand.
Factory shutdowns have led to a slight decrease in coal consumption at power plants, according to Fengkuang Coal Logistics, at a time of the year when demand usually rises because of heating needs.
The research firm said it expects benchmark prices at the port of Qinhuangdao to fall to about 1,000 yuan ($143) a ton in coming weeks, from about 1,300 yuan now.
Coastal provinces have enough fuel stockpiled for 20 days use, and demand could be further constrained as more small factories opt to take longer holidays this year, Zhang Yupeng, an analyst at the China Coal Transportation and Distribution Association, told a briefing on Wednesday.
The association expects power demand to recover strongly after the Lunar New Year holiday as more government stimulus kicks in.
