China is set to step up energy imports over the coming months, during the northern hemisphere summer period, to bridge a widening shortfall in electricity generation, according to government agency.
If this materializes it could give a timely boost to the beleaguered bulk carrier market as the country imports commodities to run through its power plants.
The National Development Reform Commission, a key government economic planning body is reported to have said that without any action the country faces a serious energy shortage.
Its Bureau of Economic Operations Adjustment said: "With the coming of summer, the peak time for electricity consumption and the rapid growth of industrial production, the gap between electricity demand and supply will become more obvious and some areas may face a shortfall in coal and oil supplies."
According to ICAP Shipping in its latest monthly report, the State Grid Corp of Chine – the largest electric power distributor in the world – has warned of a 30GW deficit across 26 provinces, against total installed power capacity of 940GW.
Shortfalls of hydro-electrical power generation, caused by droughts in some areas of the country and that have been going on for a number of months already, have added to the lack of electricity generation.
One reason stockpiles of commodities have dropped so low is that high international spot prices have made materials such as coal unattractive to import.
The statement form China said its coal imports were 27.7%, some 13.56m tonnes, lower in the first fou months compared with the same period a year ago. This was mainly due to higher price of imported coal, over $15 per tonne more than domestically-produced coal. The increased import price is partly due to the disruption to Australian output caused by floods earlier in the year that cut supply and in turn pushed up spot prices. As a result coal stocks have been falling steadily.
It seems likely that as Australia's coal exports get back on track China will increase its coal import volumes, generating demand for bulk carrier capacity.
Electricity shortfalls in China have caused rationing in some parts of the country and the government has recently raised domestic electricity prices for the first time since 2009.
China's import of crude oil and LNG have also been increasing to meet rising industrial and consumer demand.
Growing gas-powered electricity generation has boosted power supplies in some areas but not enough to meet the shortfall.