Shanghai Securities News recently reported that the Chinese government’s “dual energy consumption control” policy has been implemented across the country. In many provinces, the government has introduced intense restrictions on the consumption of electrical power and on manufacturing production; high energy consumption companies have received production restriction notices. These companies and related industrial chains have all been affected. On the upstream side, the prices of raw materials such as steel, cement, aluminum, and yellow phosphorus have risen due to limited production which stimulates short supply. The prices of some products have been setting record highs. On the downstream side, in addition to the ripple effects of price increases raising production costs, the supply cycle has begun to lengthen and the pressure on order delivery has increased. This round of electricity and production restrictions may force many high-energy small-and-medium-sized companies either to withdraw from the market or to transform and upgrade. The New Energy industry chain, including many photovoltaic industrial manufacturers as well as the vehicle battery industry, have also been affected by the power curtailment. Tens of the publicly traded companies issued announcements on the impact of the new government policies; some have had to pause production.
Source: Shanghai Securities News, September 24, 2021
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