Shanghai Heat Wave Affects Production at Baosteel to Ford

A record heat wave in Shanghai is hurting traffic at some auto dealerships, cutting client visits at brokerages and forcing utilities to delay increases in water prices as the government takes steps to help residents endure the hottest temperatures in 140 years.

At least 11 people have died from heatstroke since the mercury started to soar last month, the Shanghai Daily reported yesterday, citing local authorities. On July 26, the thermometer reading jumped to 40.6 degrees Celsius (105 degrees Fahrenheit), the highest since record-keeping began in 1873, the city’s weather bureau said.

“The hot weather has affected the number of customers visiting our dealership,” said Chen Yan’er, general manager of a Ford dealership. “It’s worse during the weekdays, with a noticeable 15-20 percent drop in people coming in.”

A slump in consumption would come at a bad time for Shanghai, which has become increasingly reliant on services for growth. The city’s economy expanded 7.7 percent in the first half of the year as growth in its service industries enabled China’s commercial hub to outpace the national average.

Wei Wei, a Shanghai-based analyst at West China Securities Co., said the heat wave has forced her and her colleagues to halve the number of client visits.

Photographer: Peter Parks/AFP/Getty Images

A pedestrian uses his jacket to shelter from the sun as a heatwave continues in Shanghai. Close

A pedestrian uses his jacket to shelter from the sun as a heatwave continues in Shanghai.

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Photographer: Peter Parks/AFP/Getty Images

A pedestrian uses his jacket to shelter from the sun as a heatwave continues in Shanghai.

“We’d like to avoid visiting clients as much as we can because it’s too hot,” Wei said. “The contacts with clients are mainly done through phones, QQ, text messages or WeChat. (700) Through those means, we still can serve clients well. The hot weather hasn’t affected stock transactions here as lots of trading is done through the Internet.”

Keeping Cool

Shanghai has decided to postpone a residential water tariff increase by a month to Sept. 1 as high temperatures are expected to continue, the government said in a statement on its website. Some residents of the city have called for the government to lower electricity prices on microblogs.

Local residents are taking to air-conditioned venues like shopping malls and fast-food restaurants to seek refuge from the heat. A crowded waiting area at a China Minsheng Banking Corp. branch was mostly people with no banking business, a security guard said. The elderly are using free passes to ride air-conditioned buses just to keep cool, the Youth Daily reported.

Shanghai’s factories are adopting flexible working arrangements to help workers cope with the heat or paying them extra to keep production lines operating as usual.

“We are offering so-called high-temperature subsidies to workers as other SOEs do,” said Alex He, a spokesman for Baosteel Group Corp., the parent company of the nation’s largest-listed steelmaker. “We are adjusting our working plans as we usually do in summers in accordance with arrangements by the Shanghai government. Steel production is non-stoppable.”

No Blackouts

Ironically, a national government directive to reduce production overcapacity is helping to ease demand on the power grid from increased use of air conditioners. The government last week ordered more than 1,400 companies in 19 industries to cut capacity this year as part of efforts to shift toward slower, more-sustainable economic growth.

“We haven’t heard any power supply gap or any major blackout so far this year simply because there’s subdued demand from manufacturing sector amid a weakening economy,” said Tian Miao, an energy policy analyst at North Square Blue Oak, a London-based researcher. “With the government pledging to cut excess capacity, demand for power is very sluggish.”

To contact Bloomberg News staff for this story: Gregory Turk in Shanghai at gturk2@bloomberg.net

To contact the editor responsible for this story: Gregory Turk at gturk2@bloomberg.net

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