China’s Power-Capacity Utilization at Record Low, Mirae Says

China’s power plants are operating at a record-low utilization rate as many have closed, potentially causing the most severe electricity shortage since 2004, Mirae Assets Securities said.

“Burdened by bulging losses, many power generators have shut,” Gordon Kwan, the Hong Kong-based head of energy research at Mirae, said in an e-mailed note today. “High coal prices and the capped electricity price have also reinforced fears” that power rationing may spread to manufacturing hubs including Guangdong, Zhejiang and Jiangsu, Kwan said.

China’s April electricity output fell from a seven-month high as the cost of coal rose. Prices of the fuel at Qinhuangdao port, a domestic benchmark, climbed for a sixth week as of May 9 to the highest in more than two years, according to the China Coal Transport and Distribution Association.

The country may face a summer shortage of 30 gigawatts as supply lags behind demand growth, the China Electricity Council said on April 29. That deficit is about twice the shortfall Japan faced after the March 11 earthquake, Mirae’s Kwan said.

China’s five largest power producers including China Huaneng Group Corp. have limited purchases of coal to control costs, Economic Observer reported today, citing a person it didn’t identify.

--Wang Ying in Beijing. Editors: Ryan Woo, Paul Gordon.

To contact Bloomberg News staff for this story: Ying Wang in Beijing at +86-10-6649-7562 or ywang30@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.

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