Newsletter: APAC economies face escalating energy crisis

High energy prices, fuel supply disruptions and shortages of oil, gas and coal in the region are likely to worsen in coming months. Regulators have been forced to intervene with the suspension of electricity markets and self-imposed blackouts to clamp down on non-essential energy consumption.

Despite ongoing concerns of a global economic slowdown, crude oil futures in Asia managed to reverse early losses of more than $2 billion. The rebound was likely induced by signs that the sell-off in crude oil prices was overdone, and prompt inter-month time spreads have continued to strengthen despite the weakness in spot prices.

Peak power load in several Chinese provinces exceeded 894 GW amidst a heat wave, with power loads in provinces and regions of Shandong, Henan and Ningxia all hitting record highs. Driven largely by air conditioning and cooling systems, record power demands have led Chinese Premier Li Keqiang to call for increased coal supply to avoid power cuts.

China’s bauxite imports are expected to stay elevated in the coming months, after reaching monthly record highs above 10 million mt for five consecutive months. This is due to a sharp demand from Russia for alumina exports, a material extracted from bauxite.

China's bonded bunker sales for the first half of 2022 are on track to post a year-on-year decline, weighing on the country's ambitions of expanding its bunkering market. In addition to high import prices, the Shanghai lockdown and port congestion have also hindered efforts to grow bunker sales in the country.