Despite government attempts to improve coal supply and limit electricity usage in a post-pandemic energy crisis affecting numerous nations, the largest provincial economy in China's northeast rustbelt warned on Monday of growing power shortages.

The energy crisis that has gripped the world's second-largest economy and top exporter is anticipated to persist until the end of the year, with experts and traders predicting a 12% reduction in industrial power use in the fourth quarter due to a lack of coal supplies this winter.

On Monday, Liaoning province raised its power shortage alert to its second-highest level in two weeks, warning that the shortfall may reach over 5 gigawatts (GW), as per Reuters.

China's largest province warns more power shortages

Liaoning, the largest economy and power consumer among the three provinces that make up China's rust-belt industrial area, has been experiencing severe power shortages since mid-September. A level-two warning means that there is a power shortfall equal to 10-20% of total demand.

The recovery in global economic activity following the lifting of coronavirus restrictions has revealed fuel shortages in China and other nations, leaving companies and governments scurrying as the northern hemisphere enters winter.

Per NDTV, the recovery in global economic activity following the lifting of coronavirus restrictions has revealed fuel shortages in China and other nations, leaving companies and governments scurrying as the northern hemisphere enters winter.

According to a warning issued by the Liaoning Provincial Industry and Informatization Department, "the biggest power shortage could reach 4.74 gigawatts (GW) on October 11." It said an order to reduce electricity use had been put in place starting at 6 am (2200 GMT) on Sunday.

The province also issued a level two power shortage advisories for each of the last three days of September, when the daily power supply deficit reached 5.4 GW, knocking off power to hundreds of thousands of homes and forcing industrial units to shut down.

The power outages are the result of tighter supplies and skyrocketing coal costs, which account for more than 70% of the region's electrical generation. Due to low wind speeds, wind farms have also been put on hold. In 2020, wind power accounted for 8.2 percent of Liaoning's total electricity output.

Shanxi and Inner Mongolia, China's top two coal mining areas, ordered more than 200 mines to increase production capacity and prioritize coal delivery to power plants in northeastern provinces, including Liaoning, last week.

Analysts and dealers, on the other hand, predict that coal production will fall short this winter and that China would have to reduce industrial power use by approximately 12% in the fourth quarter.

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Floods worsen energy crisis in China

Shortly after trading began on Monday, China's thermal coal futures surged 8% to a daily upper-trading limit.

Official figures show that Inner Mongolia is China's second-largest coal-producing area, generating slightly over 1 billion tonnes in 2020 and accounting for more than a quarter of the country's total.

However, output fell 8% in 2020 and fell every month from April to July this year, owing in part to a Beijing-led anti-corruption investigation into the coal business last year, which resulted in decreased production as miners were prohibited from producing over permitted capacity.

Flooding in neighboring Shanxi province, China's largest coal area, forced the closure of 27 coal mines this week.

Coal stocks at major Chinese ports were 52.34 million tons in late September, just before the start of a week-long national vacation last Friday, down 18 percent from the same period last year, according to statistics gathered by the China Coal Transportation and Distribution Association.

Meanwhile, as northeastern China begins the winter heating season, coal demand is increasing, with major power plants holding stocks for approximately 10 days of usage, down from more than 20 days last year.

China has reopened dozens of other mines and approved several new ones to assure electricity and heating supplies to residential customers.

Analysts say the administration has also called for "appropriately" increasing coal imports to levels comparable to last year after imports dropped about 10% in the first eight months, SCMP reported.

Despite a nearly year-long unofficial import restriction on coal from Australia, it has freed Australian coal from bonded storage, and utilities have tapped uncommon supply sources like Kazakhstan and the United States.

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