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China’s Electricity Price Hike in Oct. Impacts Several Fastener Companies
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2021-10-15
The “storm” caused by the electricity consumption and manufacturing control policy mandated by the Chinese Government has recently become more drastic, resulting in the electricity price hike in many Chinese provinces in Oct. In Aug. this year, China’s National Development and Reform Commission announced a report on the status of electricity consumption and manufacturing control in each province during H1 2021, revealing that 9 provinces (incl. Qinghai, Ningxia, Guangxi, Guangdong, Fujian, Xinjiang, Yunnan, Shaanxi, and Jiangsu) were put on the “Level 1 Alert” due to increased electricity consumption; other 10 provinces (incl. Zhejiang, Henan, Gansu, Sichuan, Anhui, Guizhou, Shanxi, Heilongjiang, Liaoning, and Jiangxi) were put on “Level 2 Alert” due to the inability to meet the requirement for electricity consumption reduction. As a result, the regional governments of all of these provinces referred to in the report have carried out their strict electricity consumption limitation measures, causing a direct and significant impact on local industry and manufacturing. Several fastener manufacturers in China have received the government’s urgent notice mandating them to adopt the “4 day offs per week” or “5 day offs per week” measure and make advanced replenishments as soon as possible in order not to generate possible impacts on their operation.
Among the provinces put on the alert list, Jiangsu, Guangdong, and Zhejiang are where lots of Taiwanese fastener manufacturers invested in setting up their factories. With continuous implementation of the current electricity consumption and manufacturing control policy, manufacturing (especially those industries requiring more electricity consumption such as steel, building materials, nonferrous metals, and fasteners) definitely will face the biggest impact. The steel industry is known to have been suffering more impacts from the policy. Reduced capacity and surging steel prices have resulted in the continuous increase in manufacturing costs and prices of stainless steel fasteners.
The Chinese Government has not made a clear statement yet about how long the power shortages will last. However, it is unquestionable that this issue remains a big task to the material supplies and production schedules of all companies and they have to think over how long their existing inventories can last and if their capacities can meet the ever-changing ordering demands. In addition, even though their existing inventories can meet the demands, the ways to load and deliver products will also be some problems. It is known that in some regions of China the use of power generators is also prohibited and even the plan B for power cut must be also rearranged. This policy influences all sizes of companies and only those with stronger perseverance, better management, and more capital can survive in the end.
Among the provinces put on the alert list, Jiangsu, Guangdong, and Zhejiang are where lots of Taiwanese fastener manufacturers invested in setting up their factories. With continuous implementation of the current electricity consumption and manufacturing control policy, manufacturing (especially those industries requiring more electricity consumption such as steel, building materials, nonferrous metals, and fasteners) definitely will face the biggest impact. The steel industry is known to have been suffering more impacts from the policy. Reduced capacity and surging steel prices have resulted in the continuous increase in manufacturing costs and prices of stainless steel fasteners.
The Chinese Government has not made a clear statement yet about how long the power shortages will last. However, it is unquestionable that this issue remains a big task to the material supplies and production schedules of all companies and they have to think over how long their existing inventories can last and if their capacities can meet the ever-changing ordering demands. In addition, even though their existing inventories can meet the demands, the ways to load and deliver products will also be some problems. It is known that in some regions of China the use of power generators is also prohibited and even the plan B for power cut must be also rearranged. This policy influences all sizes of companies and only those with stronger perseverance, better management, and more capital can survive in the end.
中國限電雙控
電價
扣件
limited electricity
electricity prices
fasteners
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