MNI: China H2 Industrial Power Growth To Fall Below H1 Level
MNI (BEIJING) - Electricity usage from China’s industrial base will likely remain below the sector’s H1 6.9% y/y growth rate in the second half, due to high-base effects and a slowdown in demand from energy intensive industries, but overall power consumption is expected to exceed 2023’s 6.7% gain due to higher household usage, local analysts and economists have told MNI.
"Industrial power usage grew strongly in H1 but has looked sluggish since June,” said David Fishman, senior manager at energy consultancy the Lantau Group, noting September’s 3.6% growth marked the sector's lowest increase this year, a matter which could have contributed to the monetary and fiscal stimulus revealed over the last two months.
“Even as September’s industrial output surprised to the upside with a 5.4% y/y increase, the sector’s electricity demand growth rate remained lacklustre, indicating slower relative consumption in power heavy industries,” Fishman added, noting high-base effects had played a role.
While overall industrial sector demand went up 5.9% during the first three quarters, China’s four major high-energy industries – chemical, mineral, non-ferrous and ferrous smelting – only increased power usage 3.0% y/y, slowing from the 4.1% recorded over the same period last year, according to data from the China Electricity Council. (See MNI:Limited Scope For China Q4 Steel Demand Recovery– Analysts)
“Looking to Q4, high-base effects will continue to weigh down industrial electricity growth rates,” Fishman predicted, pointing to the 8.6% and 9.3% y/y levels over October and November 2023.
Recent industrial electricity data suggested productive activities have slowed, a chief economist at an international bank in China told MNI, noting the sector’s demand growth for the first three quarters had declined from H1’s 6.9% growth. A high base effect had also contributed, the economist added.
STRONG HOUSEHOLDS
China’s total electricity demand growth this year will likely beat 2023’s 6.7%, with the China Electricity Council recently revising its forecast to 7.0%, following June’s 6.5% and January’s 6.0% outlook adjustment.
Accelerating household consumption rates – up 23.7% and 27.8% in August and September – had driven the rapid growth this year, said Qi Qin, China analyst at the Centre for Research on Energy and Clean Air thinktank.
While higher than expected temperatures had driven the official revisions, increased air-conditioning usage – even at milder temperatures – had surprised analysts, Qi added, noting overall consumption had only risen by 8.90% and 8.50% over August and September.