According to official statistics, power shortages in China will reach 16,000,000 kilowatts during the summer of 2008, with the following two factors largely to blame. First, continuous high temperatures in south China led to the high power consumption.  Second, supplies of coal for power generation have been tightening.

Sources report the power shortages will reach 10,220,000 kilowatts in Shandong province, accounting for 1/3 of total demand in the province.  The province power shortages are the largest in the past 10 years.

Shandong province is a major producer in China of nickel pig iron, and NPI production will be greatly affected by power shortages.  According to CBI’s survey, there are 22 NPI producers in the province, and the majority of producers with furnaces halted production during the first half of 2008 due to soaring coking coal prices. Currently, only eight NPI producers remained online.  When power supplies were normal, the eight NPI producers were only running at 20-30% during 1H08 due to market conditions, and now production at a small number of these have now been affected by frequent power outages.  Nickel production losses due to power shortages at the 8 NPI remaining producers during August are estimated to be 1,267 mt, down 63.1% from the normal 2,009 mt.  Output of nickel at NPI producers with furnaces who remained online will be limited due to low nickel content (1.6-1.8%).