Typhoon could disrupt Chinese coal consumption

A strong typhoon that is forecast to make landfall in industrial regions of east and south China by tonight could trigger heavy flooding and disrupt coal consumption.

China's meteorological administration has issued a code yellow warning on the impending approach of tropical storm Hagupit, which is currently passing through northern Taiwan in a northwest direction towards the Chinese coastal mainland. Hagupit is expected to strengthen into a typhoon as it moves across the east China sea, and could push sea water inland and cause floods in parts of Zhejiang and Fujian provinces by bringing more heavy rainfall.

China's coastal provinces are important coal consuming regions, as they are more populous than inland provinces and contain a larger proportion of the nation's industries. The country's coastal regions have been relatively unaffected by recent flooding across large swathes of south and central China.

The timing of the storm is especially unfortunate for China's cement sector, an important coal consumer. The country's cement industry suffered prolonged disruptions from early June, from nearly 40 days of consecutive heavy rainfall that resulted in flooding and hampered infrastructure projects.

But just as the rainy season in south China is ending and cement producers based in east China are expecting a general recovery in the sector, the onset of a typhoon in the region could dampen hopes of a significant increase in consumption.

Authorities have restricted certain economic activity in the regions expected to be hit by Hagupit, which could affect power consumption although the storm is expected to lose strength as early as Tuesday as mountains in east China are expected to cushion its approach further inland.

By Kelvin Leong