According to industry sources, the last couple of days have seen residential power across north-eastern China become affected by power rationing and sporadic blackouts. Authorities in Liaoning have implemented power rationing and have asked its citizens to turn off home appliances when not in use, while officials in Jilin Province have restricted power use in several cities and residents in parts of Heilongjiang Province have received schedules of upcoming power outages. 

As winter inches closer, power consumption is set to increase as heating demand picks up pace. Last year and for October through December, China’s thermal energy production was on average 14% higher than the production seen in September. As we have previously noted, China’s thermal power consumption has outpaced its domestic coal production and import quotas has yet not filled the gap, evident by sustained high domestic coal prices. Coupled with firm LNG prices, we find recent reports supportive for China’s thermal coal imports for the remainder of 2021e but note that import quotas would have to be waived before a meaningful uptick relative can be seen.