Heat Wave
As skeletons are found as lake waters retreat across the US, things are just as bad in China where certain regions have been under high temperature alerts for over three weeks setting the tone for the most aggressive heat wave in 60 years. With temperatures over 100⁰ conditions are taxing the Chinese electricity grid, the world’s largest (larger than the US, India, and Russia combined), and despite a 9.8% y/y increase in power production in 2021, consumption increased 10.6% over the same period and the grid has been faced with brown-outs and black-outs, especially during the most recent heat wave. With the heat wave causing drought conditions, tourists are faced with closures, such as the Chishui Waterfall in Guizhou, a 250 ft high and 260 ft wide attraction closed last weekend as the waterfall’s feeder river dried up
Chishui Waterfall - Source: Social News XYZ
In order to conserve energy local governments have been issuing orders to shut down air conditioning systems in theaters and other businesses to funnel power to residential customers and given that this heat wave began earlier than the former record holder in 2013, meteorologists at the National Climate Center expect that this type of heat wave will become the ‘new normal’, starting earlier and lasting longer each year. The current heat wave is expected to last another two weeks, making it the longest since record keeping began in 1961
Power restrictions in some cities have gone further, limiting production or closing factories in a number of provinces, and while Foxconn (2354.TT) in Chengdu and Compal (2324.TT) in Chongqing say the restrictions have ‘limited impct’, an extended heat wave could pressure the supply chain for a number of CE companies, with concern that Apple’s (AAPL) expected October iPad update might be affected by the production restrictions, which were implemented yesterday and are initially expected to last until 8/20. With South Korea is facing extreme flooding and China facing both power and drought issues, we have to consider the possibility that CE component and device pricing will remain higher than we might have expected, although trying to predict Mother Nature is a fool’s game. Based on Figure 2 there is some hope toward the end of August…
Power restrictions in some cities have gone further, limiting production or closing factories in a number of provinces, and while Foxconn (2354.TT) in Chengdu and Compal (2324.TT) in Chongqing say the restrictions have ‘limited impct’, an extended heat wave could pressure the supply chain for a number of CE companies, with concern that Apple’s (AAPL) expected October iPad update might be affected by the production restrictions, which were implemented yesterday and are initially expected to last until 8/20. With South Korea is facing extreme flooding and China facing both power and drought issues, we have to consider the possibility that CE component and device pricing will remain higher than we might have expected, although trying to predict Mother Nature is a fool’s game. Based on Figure 2 there is some hope toward the end of August…
10 Day Weather Forecast - Selected Cities - China/US - Source: Weather.com
RSS Feed