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China hit by worst power crisis in years

May 16/2011

(ICIS) -- China is grappling with its worst power shortage in years, particularly in the countrys main industrial bases in the east and south, which will lead to reduced economic output in the second quarter, industry sources said on Monday.

China typically faces a power crunch from June to September, when demand is at its peak. This year, the shortage came about in March, and it is expected to worsen, said a source from the State Grid, which builds and operates Chinas power networks.

China Electricity Council, a power-industry federation, said in late April that a power shortfall of about 30m kilowatts will be seen this summer and that the demand gap will likely expand.

A fuel shortage has resulted from heavy demand for diesel since March, as the manufacturing season approaches its peak. State-owned oil firms are trying to address the lack of fuel by cutting production of chemicals and curbing exports. The power restrictions in place in select regions of China will only aggravate the fuel shortage, analysts said.

In the eastern Zhejiang province, some polyvinyl chloride (PVC) facilities and their downstream pipeline plants reduced operating rates by 10-20% from March, sources said.

Some polyester plants in this province have bought diesel generators, hoping to keep normal production at plants in anticipation of the power rationing, they said.

Chinas energy giants China National Petroleum Corp (CNPC) and Sinopec are boosting domestic supply of diesel amid the power shortage.

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