China power firms suspend publication of coal data, frustrating analysis of industrial production

10-Jul-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

The publication of daily coal consumption data from China’s main power companies, which is widely used by economists to gauge industrial output and broad economic activity, has been suspended after the electricity providers stopped reporting their numbers.

The decision to stop releasing data for five major power generation groups, which between them supply information from 56 coal-fired power plants, comes as analysts scramble for clues about the speed of China’s economic recovery following the coronavirus shock earlier this year.

Compared to official economic indicators that are often published on a monthly basis with headline gross domestic product growth published quarterly daily figures on how much coal is being burned at thermal power plants offers a more up-to-date guide to Chinese economic activity.

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Qinhuangdao Port, a major coal trading hub in northern China, stopped giving daily updates on coal consumption and inventory at the beginning of this month after Huaneng, Huadian, Datang, Shanghai Electric Power and Guangdong Energy Group stopped sharing the data.

This has been an important high frequency indicator for analysts to track the progress of activity in China, especially earlier this year when the outbreak was more severe

Michelle Lam

The decision has frustrated economists and analysts who have been using the data to gauge demand and in turn estimate production levels at factories, which consume most electricity.

“This has been an important high frequency indicator for analysts to track the progress of activity in China, especially earlier this year when the outbreak was more severe,” said Michelle Lam, a China economist at French bank Societe generale.

Lam said the coal consumption data was not perfect, but was closely correlated to industrial production.

The electricity generation firms did not provide a reason for the change, but some analysts said it could be related to surging coal prices, which increase the costs for power plants.

Coal producers could use the data to raise prices if they observed a sharp rise in consumption coincide with a sharp fall in stocks at the power plants.

One possible explanation is that power plants do not want to give information to coal suppliers that could lead to an increase in prices, said Yin Ruizhe, a fixed income analyst from China Merchants Securities.

The information was first made available in 2009 and mainly used by port and railway staff to understand the supply and demand for coal and gauge transport requirements. In recent years, it has been used by traders and researchers for market analysis and price estimates given a lack of other high quality data.

It mainly reflected coal consumption in the coastal areas of eastern China, where most Chinese factories are located.

Without daily coal consumption figures, analysts said they could still use other data sets including steel capacity utilisation to track economic activity, but many alternatives are industry specific and so do not reflect a broad picture of the industrial sector, said Yin

Daily coal consumption from China’s six major power companies has historically matched the change in official industrial output data 66 per cent of the time, which was better than other indicators such as the national steel blast furnace operating rate, according to research by Yin.

As of Wednesday, only Zhejiang Zheneng Electric Power, the largest state-owned power generator in eastern China’s Zhejiang province, was still reporting coal consumption and inventory data.

The five companies that stopped data publication did not reply to queries from the South China Morning Post.

https://sg.news.yahoo.com/china-power-firms-suspend-publication-105223053.html

 


Category: China

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