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China Power Industry Research Report 2002Q2



III. Characteristics of Power Supply and Demand and Factors Influencing It in the First Half Year


1. Characteristics of Power Supply and Demand


According to above-mentioned power supply and demand and the inter-network power exchange, the national power supply and demand in the first half year has the following characteristics.
First, unreasonable power source in part areas, that is, overmuch proportion of hydropower without fine accommodating capability causing inadequate production capability in low water period, is the main reason for power limitation in Central China and Sichuan-Chongqing area (Sichuan and Hunan) in the first half of this year.
Second, the growth rate of peak load continuously exceeds that of power consumption. With the increase of air-conditioner number in building and establishments and the rate of residents¡¯ air-conditioner ownership, the peak load in provinces is increasingly more sensitive to temperature, and the gap between crest and trough becomes greater. According to survey, the power load to lower temperature by air-conditioner has already reached 3 million kw in Beijing, accounting for 38% of the total load in Beijing area. Thereinto, industrial load accounts for 9.6%, commercial load 25.5%, facilities load 34.1%, household load 21.7% and other load 9.1%. And the facilities load is in the direction of continuous growth.


Third, the faster power demand than power supply within the area is one of the major reasons for the short power supply in rush hours in Guangdong.
Third, 1/3 areas, mainly east areas with comparatively developed economy, have basic balanced power supply and demand. Some areas, such as Zhejiang and Guangdong, may have short supply in specific periods, but the duration is quite short. Power supply in 2/3 areas is relatively abundant.
2. Main Influencing Factors on Power Supply and Demand
There are many influencing factors on power supply and demand, but the major ones are as the follows. We will make special analysis on temperature factor.


Impetus of Market Demand


Under the influence of recovering global economy, China has a fine opening of national economy, which keeps quite fast growth in stableness and therefore pushes the power demand. This is mainly showed by: first, the faster growth of industrial production. Total state-owned industrial enterprises and non-state-owned industrial enterprises with an annual sale over 5 million Yuan create 1.446 trillion Yuan added value, increased correspondingly by 11.7%, and industries of different ownerships have all-round development. The telecommunication equipments manufacturing and transportation equipments manufacturing becomes the leading force in pushing the rapid industrial growth; second, the fast developing fixed investment. The investment in the second industry, which can push power demand in large scale, is greatly enhanced by 25.3%. The investments of all economic types grow fast and investment in real estate development has a strong increasing trend. Third, sale in domestic market is basically stable with low market price, and residents¡¯ consumption confidence gets stronger to certain degree. The growth in resident income speeds up and the domestic consumer¡¯s market keeps stable, plus the completion of transformation of part urban and rural electric networks. Fourth, growth in foreign trade speeds up and the continuous fast growth in foreign capital utilization also makes up part of the influence caused by falling export. Rapid and persistent economic development leads the fast growth in social power consumption by 8%. The growth in industrial power consumption reaches 9.2%, becoming the major force in pushing power consumption growth in this round.
Continuous Development of Highly Power-consuming Industries
Production of highly power-consuming products has quite great impact on Chinese power demand. In the first half of this year, the growth rates of finished steel products, pig iron, raw coal, steel, paper-making, cement, soda ash and chemical fertilizer are increased to some extent compared with those of last year, while the growth of ten kinds of non-ferrous metal and plate glass slows down and production of ferroalloy witnesses negative growth. Thereinto, the growth rates of raw coal, steel and chemical fertilizer grow by 10 percentage points, those of pig iron and paper-making by 5 percentage points. In general, the production of highly power-consuming products realizes fast growth in the first half of year 2002.
However, ever since January 1st, 2002, Chinese highly power-consuming industries will face the challenge of large-scale reduction in tariffs and non-tariff measures. China will fulfill its promises on accession into WTO, that is, reducing general tariff from 15.3% of last year to 12% and the average tariffs reduction in crude oil and finished oil, paper and paper products, chemical products, traffic vehicles, machinery products and electronic products is over 25%. From year 2002 on, quota system on products like steel will be abolished and the import quota of chemical fertilizer, automobile and sugar will greatly increase, so Chinese import will grow rapidly. Due to tariff reduction and abolishment of quota system, the steel import will grow by large scale.
On the whole, the power consumption in highly power-consuming industries keeps growing in the first half of this year. The contributory rate of power consumption in these industries to growth in industrial power consumption is 47.7%, decreased by 1.8 percentage points. And the growing trend will slow down in the latter half of the year.



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