Economic Buzz: Chinas Factories Shutting Down Due To Drought And Intense Heatwave

24 Aug 2022 , 12:32 PM

Mere months after widespread covid lockdowns in Shanghai disrupted supply chains and forced manufacturers to halt operations, China is again seeing an uptick in factory shutdowns. This time, the culprit is not the coronavirus, but an intense heatwave and drought across Chinas south, around the Yangtze river basin. Water levels behind dams are depleting, curbing electricity generation at hydropower plants, just as air conditioning demand is spiking. To prevent power outages, authorities in Sichuan province?which relies on hydropower for about 80% of its energy needs ?have ordered factories to halt operations. Some major manufacturers that have had to halt operations in Sichuan include the Japanese carmaker Toyota and CATL, the Chinese lithium battery giant. Critical raw material companies have been hit too, and the effects will ripple through the supply chain. For example, Tongwei, the worlds largest supplier of polysilicon?a key raw material for solar panels?has suspended production, as has lithium producer Yahua Industrial Powered by Commodity Insights