China’s Industrial Hub Risks Power Turmoil as War Hurts Brokers

Power market brokers in the Chinese industrial hub of Guangdong are moving to cancel long-term supply deals with factories as the Iran war drives a surge in spot prices and erodes their margins.

Some of the brokers are now trying to back away from the contracts, or are at risk of defaulting on them, according to people with direct knowledge of the situation. Given recent price shifts, the brokers are being forced to buy power from the more-expensive spot market to cover their obligations, said the traders, who declined to be named discussing sensitive matters.