Analysts said the province is also the epicenter of China’s lithium mining – a key component of electric car batteries – and the shutdown could increase the cost of raw materials.
Sichuan, one of China’s largest provinces with a population of 84 million, has asked 19 of the region’s 21 cities to suspend production at all factories from Monday to Saturday, according to an “urgent notification” issued Sunday by the provincial government and state network. .
The notice said the decision was made to ensure that sufficient power was available for residential use.
In a note to clients, Daiwa Capital analysts said plant closures for this week could reduce supply of polysilicon and lithium and push prices higher.
Several Chinese companies have warned that their production may be affected by the power outage in Sichuan, including Sichuan Haowu Electromechanical Corporation, an auto parts manufacturer, and Sichuan Lutianhua Corporation, which produces fertilizers and chemical products.
Aside from Sichuan, other major Chinese provinces – including Jiangsu, Anhui and Zhejiang – have urged businesses and households to conserve energy as the heat wave depleted electrical supplies.
In some areas, offices have been ordered to raise the air conditioner temperature above 26°C Or shutting down elevator services for the first three floors to conserve electricity.
Inflation risk
The extreme heat in China has also led to crop failures in many parts of the country, adding to inflationary pressures Last month.
He pointed out that the intense heat caused droughts in some agricultural areas in the south. In the north, rainfall and flooding have also caused some crops to fail.
“August and September are the two primary periods for the formation of autumn grain production. [We must] We pay close attention to the impact of natural disasters, insects and diseases on food production in our country.”
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