China Faces Winter Warnings as Coal Demand Grows

The combined forces of extreme weather, the COVID-19 crisis and political pressures may be setting the stage for energy shortages in China next winter, analysts say. The country's electricity generators have been racking up losses due to record prices for coal and natural gas, while summer power demand spikes in a punishing season of heat waves and floods. Spot market costs for liquefied natural gas (LNG) have climbed to nearly double the break-even rate for profitable power production, S&P Global Platts news service said.

Last winter brought unusually cold temperatures to both Europe and North Asia, straining LNG supplies, said Mikkal Herberg, energy security research director at the Seattle- based National Bureau of Asian Research."Now they are both having hot summers along with a huge surge in industrial activity with the easing of COVID constraints, especially China, which is putting further strain on supply and stock levels," said Herberg. "There is something of a perfect storm going on in the global gas market," he said.

Rising demand for power and production has also lit a fire under the market for coal.

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