Novel coronavirus threat sends jitters across China's power sector

Industry accounts for 70% of power demand in China and closed factories will hit demand hard.

The threat of the 2019 novel coronavirus (2019-nCov) outbreak extends to China’s power sector, according to an analysis by Wood Mackenzie.

An immediate impact of the 2019-nCoV outbreak has seen workers not returning to their jobs. “In Hubei province, factories and construction sites are dormant, while much of the rest of the country is only slowly returning to work,” noted Gavin Thompson, vice chairman for Energy – Asia Pacific at Wood Mackenzie.

Electricity demand, already weakening through 2019, is on the ropes. Industry accounts for almost 70% of total power demand in China so closed factories are expected to hit demand hard.

“By the end of January, peak power load in Hubei province dropped to 22.5 GW, some 21% lower than planned,” Thompson said.

Weaker power demand and industrial activity inevitably impact both domestic production and consumption of thermal coal. “Imports are also expected to slow, with reports of Indonesian producers already being asked to delay loadings. The effect on prices though is likely to be muted; prices fell so much through 2019 that globally many producers are already operating at negative margins,” Thompson added.