Plunge in power rates helps Chinese factories

A crash in Chinese coal prices and a flood of clean energy are cutting power rates in major industrial hubs, easing pressure on some of the factories caught in the crossfire of trade hostilities with the US.

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ries caught in the crossfire of trade hostilities with the US. In Jiangsu province, the average price for June contracts settled by centralised bidding plunged 24 per cent year on year to 313 yuan (S$56) per megawatt-hour, the lowest level regulators allow. In Guangdong, the rate dropped 8.3 per cent to the government's floor of 373 yuan per MWh. The two coastal powerhouses are heavily dependent on exports, with a combined economy bigger than that of France.

The main driver is a collapse in the price of coal - down 30 per cent over the past year - which accounts for more than half of the electricity generated in China. A shift to market-based pricing, particularly for renewables, is also helping to weaken rates.