What Is The Main Reason Behind The Recent Power Cuts?

Sep 28, 2021

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One is to deal with rising commodity prices. As the world’s factory, our demand for bulk commodities is the largest in the world, but unfortunately, as the largest buyer’s market, we have no pricing power for bulk commodities, because bulk commodity prices are mostly affected by futures prices, and my country does not have a deep involvement. .

So how does this have to do with the curtailment? After our investigation, we can find that the major electricity consumers are metallurgical and chemical companies. Most of the raw materials of these companies are bulk commodities and are of high consumption and low efficiency. Now that we cut the power supply and shut down these factories, we are taking the initiative to reduce demand, which makes the rise of commodity prices lack of momentum, especially iron ore, and cannot allow Australia to take advantage of it for a long time.

Second, to cool down low-end exports and real estate. The latest economic data in August showed that domestic consumption began to decline, while exports soared year-on-year. This shows that most of the new domestic electricity demand is used for exports. On the one hand, commodity prices are high, and on the other hand, our export companies are becoming more retail customers. The involution is so severe that we dare not raise export prices. This is equivalent to wasting our resources to allow the West to enjoy low-priced goods. We also acted as a big loser and relieved the pressure on US inflation. So I need to cool down and I can no longer be a good person. As for real estate, it is also a big consumer of steel, and limiting electric power effectively reduces the supply of steel. Some people on the Internet have also said that forcing export companies to increase prices for transformation and upgrading, this effect does exist, but it should also be a piggyback. If it really comes, you can directly cancel export subsidies.

Third, prepare in advance for heating the country for the winter. As we all know, my country’s power generation is still dominated by thermal power generation, and thermal power generation basically burns coal or natural gas. These two are also the main resources for heating in the north. Therefore, the current electricity restriction is to save resources, and to control the price increase of these two resources at the same time, to prepare for the protection of winter heating for northern residents. In addition, electricity is also used for heating in the winter, so resources are reserved in advance to meet the demand for electricity in winter.

Fourth, the goal of carbon neutrality. Why is this left behind? The main reason is that this is definitely just a slogan and appearance. The West has not made clear actions. China has only promised to achieve carbon emission reduction targets based on China’s national conditions, so it is unlikely that this will be the main reason. Limit electricity. This is just a piggyback for publicity.

To mitigate the impacts of these restrictions, we recommend that you place the order as soon as possible. We will arrange production in advance to ensure that your order could be delivered on time.