The province is also China’s hub for lithium mines — a key component of electric car batteries — and the shutdown could drive up the cost of the raw material, analysts said.
Sichuan, one of China’s largest provinces with a population of 84 million, has told 19 of the region’s 21 cities to suspend production at all factories from Monday to Saturday, according to an “urgent message” issued Sunday by the provincial government and the state network .
The decision was made to ensure that sufficient power is available for domestic use, the statement said.
Closing plants for a week could shrink polysilicon and lithium supplies and push prices up, Daiwa Capital analysts said in a note to customers.
Several Chinese companies have warned that their production could be affected by the power outage in Sichuan, including Sichuan Haowu Electromechanical, a manufacturer of auto parts, and Sichuan Lutianhua, which produces fertilizers and chemicals.
Aside from Sichuan, other major Chinese provinces — including Jiangsu, Anhui and Zhejiang — have also urged businesses and households to conserve energy as the heat wave has depleted electrical supplies.
In some regions, offices have been instructed to raise their AC temperature above 26 degrees Celsius or stop the elevator services for the first three floors to save electricity.
Inflation risk
The extreme heat in China has also led to crop failures in many parts of the country, increasing inflationary pressures last month.
He pointed out that the extreme heat has led to drought in some agricultural areas in the south. In the north, rain and flooding also led to crop failures.
“August and September are the most important periods for the formation of autumn grain production. [We must] pay close attention to the impact of natural disasters, insects and diseases on our country’s food production,” he added.
