Power shortage boosts diesel
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China's manufacturers turned on diesel-fueled generators as local governments rationed electricity to fight the worst power shortage in seven years.
Many factories in eastern Zhejiang Province, a manufacturing hub, are using diesel generators because of the rationing, state-run China Petrochemical Corp, the country's largest fuel supplier, said in a statement.
About 20 provinces and regions started curtailing electricity supplies this month as some power plants cut production or even shut, hit by rising coal prices and government caps on tariffs. Steel makers, including Hunan Valin Steel Co, part-owned by the world's biggest steel maker ArcelorMittal, reduced production because of the power shortage.
"We see exceptional diesel demand emerging as some manufacturers restart diesel-fueled power generators," Gong Jinshuang, a Beijing-based senior engineer at China National Petroleum Corp, said by telephone. "State oil companies may have considered boosting diesel imports, though the situation hasn't been so bad they have to issue orders to boost imports."
The Zhejiang unit of China Petrochemical, known as Sinopec, boosted diesel supply to the province by 18 percent in the first four months because of the additional demand caused by the electricity shortage, according to the refiner.
"If the situation lasts into summer, oil firms may be forced to buy more diesel despite the prices," Gong said.
It would also be more expensive for manufacturers to get electricity from small diesel-fueled generators compared with supplies from the grid, he said, without specifying costs.
Power rationing may reduce second-quarter economic growth by 0.5 percentage point, the Shanghai Securities News reported yesterday, citing an unidentified analyst. The restrictions may also result in a 1 percentage-point reduction in industrial output, the newspaper said, without giving a timeframe for the decrease.
The power crisis hasn't bottomed out yet and may worsen in summer when demand rises, Xue Jing, head of statistics at the China Electricity Council, told Xinhua news agency.
China may face a summer shortage of 30 gigawatts as supply lags behind demand growth, the China Electricity Council said on April 29. Peak power shortage may reach 50 gigawatts next year and even exceed 70 gigawatts in 2013, Xinhua reported, citing Su Shengxin, sales director at State Grid Corp of China, the country's dominant grid operator.
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