# Power squeeze curbs Chinese growth, leaves Europe in a gas bind Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-10-18 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: China's Power Shortages and Europe's Gas Squeeze Meta Description: China's power shortages and Europe's gas squeeze signal challenges to global supply chains, highlighting the urgent need to address energy issues for URL: https://financedigest.com/power-squeeze-curbs-chinese-growth-leaves-europe-in-a-gas-bindhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2021-10-18t103055z5lynxmpeh9h0hqrtroptp4china-power-1736837551213-compressed.jpg) By Muyu Xu, Oksana Kobzeva and Jason Hovet BEIJING/MOSCOW/PRAGUE (Reuters) – China’s power shortages hit growth in the world’s second biggest economy, threatening more pain for global supply chains, while Europe’s gas squeeze looked set to continue as Russia’s Gazprom showed no sign of hiking exports to the region in October. Coal, oil and gas prices have all rocketed higher in recent weeks hammering utilities and consumers from Beijing to Brussels, raising inflationary pressures and putting at risk a global recovery from the COVID-19 pandemic. The red-hot market underscores the scale of the task [facing world leaders](https://www.financedigest.com/infosecurity-europe-agenda-spotlights-innovation-as-security-leaders-address-cybersecurity-spend-in-the-face-of-economic-headwinds.html "Infosecurity Europe agenda spotlights innovation as security leaders address cybersecurity spend in the face of economic headwinds"), who are under pressure to map out plans to wean their economies off fossil fuels in preparation for COP26 summit climate talks that start on Oct. 31. Europe, which relies on Russia for 35% of its gas supplies, has seen its benchmark gas [price rise](https://www.financedigest.com/oil-prices-rise-on-u-s-drawdown-chinese-fears-weigh.html "Oil prices rise on U.S. drawdown, Chinese fears weigh") more than 350% this year. As a result, a slew of European [firms that supply gas or power](https://www.financedigest.com/europe-power-firms-need-1-5-trillion-euros-in-margin-calls-equinor-says.html "Europe power firms need 1.5 trillion euros in margin calls, Equinor says") to households and companies have folded. The Czech Republic’s energy regulator took the exceptional step of asking [suppliers](https://www.financedigest.com/french-energy-suppliers-will-let-struggling-bakers-renegotiate-contracts-le-maire.html "French energy suppliers will let struggling bakers renegotiate contracts – Le Maire") to provide reassurances that they could supply energy to homes and companies, after another of the country’s electricity and gas groups halted supply. A dozen or so suppliers have already gone bust in Britain. In Asia, [power provider Ohm Energy](https://www.financedigest.com/france-strains-to-avert-power-cuts-as-cold-snap-tests-europes-energy-resolve.html "France strains to avert power cuts as cold snap tests Europe’s energy resolve") said it had exited the retail electricity market in Singapore, the third company to do so in recent weeks. Russia says it is [ready to provide more gas to Europe](https://www.financedigest.com/exclusive-europe-ready-for-baltics-emergency-switch-off-from-russian-grid.html "Exclusive: Europe ready for Baltics emergency switch-off from Russian grid"). [Yet Russian](https://www.financedigest.com/g7-finance-chiefs-agree-on-russian-oil-price-cap-but-level-not-yet-set.html "G7 finance chiefs agree on Russian oil price cap but level not yet set") gas pipeline export monopoly Gazprom has shown no sign of racing to book extra capacity. Auction results on Monday showed [Gazprom had booked about a third of the additional gas transit capacity on offer for the Yamal-Europe pipeline via Poland for November and had not booked any volumes via Ukraine](https://www.financedigest.com/gazprom-gas-cut-tempers-economic-hopes-after-ukraine-grain-deal.html "Gazprom gas cut tempers economic hopes after Ukraine grain deal"). European politicians accuse Russia of using the squeeze as leverage to secure approval to start up the newly built [Nord Stream](https://www.financedigest.com/denmark-invites-nord-stream-operator-to-help-salvage-unidentified-object.html "Denmark invites Nord Stream operator to help salvage unidentified object") 2 gas pipeline to Germany, whose permits may still be months away. Gazprom and the Kremlin [say contracted commitments are being met](https://www.financedigest.com/winter-weather-could-be-mild-german-met-office-dwd-says.html "Winter weather could be mild, German met office DWD says") and they have not received requests to pump more. DISRUPTIONS China, which needs coal to fire up about 60% of its [power plants](https://www.financedigest.com/edpr-brings-iberias-first-wind-solar-power-plant-on-stream.html "EDPR brings Iberia’s first wind-solar power plant on-stream"), has been grappling with a shortfall in supplies and surging prices for the most polluting of fossil fuels, leading to disruption in electricity supplies for factories and homes. The constraints meant the [economy grew](https://www.financedigest.com/turkeys-economy-grew-7-6-in-q2-driven-by-domestic-demand-exports.html "Turkey’s economy grew 7.6% in Q2 driven by domestic demand, exports") 4.9% in the third quarter, its slowest pace since the third quarter of 2020 and down from 7.9% in the second quarter. A raft of measures to boost [coal supplies](https://www.financedigest.com/factbox-europe-ramps-up-coal-imports-as-energy-supply-fears-grow.html "Factbox-Europe ramps up coal imports as energy supply fears grow") has yet to feed through. A Reuters calculation, based on official data, showed [China’s average daily coal](https://www.financedigest.com/world-coal-power-demand-to-hit-new-high-after-china-india-u-s-surge-iea.html "World coal power demand to hit new high after China, India, U.S. surge – IEA") output in September was 11.14 million tonnes. [China released figures for last week](https://www.financedigest.com/oil-hits-3-week-high-as-china-eases-covid-curbs.html "Oil hits 3-week high as China eases COVID curbs") showing output was 11.2 million tonnes, meaning it had barely budged. The Chinese government is losing the battle to control soaring coal prices,” said Alex Whitworth, head of [Asia Pacific](https://www.financedigest.com/britains-superdry-sells-asia-pacific-ip-for-50-million.html "Britain’s Superdry sells Asia Pacific IP for million") power and renewables research at Wood Mackenzie. A global rebound from the depths of the pandemic-induced slump has left all [fossil fuel](https://www.financedigest.com/eu-approves-effective-ban-on-new-fossil-fuel-cars-from-2035.html "EU approves effective ban on new fossil fuel cars from 2035") suppliers struggling to keep pace. Crude prices have shot up more than 60% this year, trading around $85 a barrel on Monday, as members of the OPEC+ [oil producing alliance have struggled to pump as much as their latest production](https://www.financedigest.com/best-paying-jobs-in-oil-and-gas-production.html "Best Paying Jobs in Oil And Gas Production") deal allows. \[O/R\] [European companies are among those feeling the pinch from the energy](https://www.financedigest.com/analysis-forget-showering-its-eat-or-heat-for-shocked-europeans-hit-by-energy-crisis.html "Analysis-Forget showering, it’s eat or heat for shocked Europeans hit by energy crisis") price surge, adding to other challenges that include a shortage of memory chips and a lack of shipping containers. Supply chain volatility has intensified globally,” said Frans van Houten, the chief executive of [Dutch health technology firm](https://www.financedigest.com/varo-energy-buys-80-of-dutch-biogas-firm-aims-to-double-capacity-by-2026.html "Varo Energy buys 80% of Dutch biogas firm; aims to double capacity by 2026") Philips, which trimmed its 2021 outlook. We [expect this headwind to continue in the fourth quarter.”](https://www.financedigest.com/food-group-danone-raises-2022-outlook-as-third-quarter-sales-beat-expectations.html "Food group Danone raises 2022 outlook as third-quarter sales beat expectations") (Reporting by Kevin Yao, Gabriel Crossley, Muyu Xu and Shivani Singh in Beijing; Oksana Kobzeva and Vladimir Soldatkin in Moscow; Bart Meijer in Amsterdam; Jason Hovet in Prague; Jessica Jaganathan in Singapore; writing by Edmund Blair; editing by Jason Neely and Carmel Crimmins) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---