Multiple Provinces Raise Power Tariffs, Pushing Packaging and Printing Converters Toward Price Hikes

This round of power rationing traces back to surging coal prices, which have pushed up generation costs and left electricity supply stretched.

With rationing and output curbs in play, a fresh group of provinces has moved to adjust electricity tariffs once again.

Late September: Hunan issued a notice stating that once the in-plant standard coal price exceeds 1,300 yuan, every further increase of 50 yuan/tonne lifts the ceiling on coal-fired thermal power trading prices by 1.5 fen/kWh.

Anhui followed with its own notice, allowing direct coal-fired power trading prices to rise by no more than 10% above the benchmark tariff.

Guangdong's adjustment plan, effective from October, widens the peak-valley spread and raises peak-valley tariffs by 25%.

Inner Mongolia released a draft for public comment under which power users that join the electricity market and later withdraw would face a floor price set at 1.8 times the catalogue price.

Shandong said specific tariffs will be formed by market players — generators, electricity retailers and power users — through market-based means within a band around the benchmark price, with the upward adjustment capped at 10%.

Zhejiang will refine its time-period divisions from 15 October and widen the peak-valley price spread.

Henan, starting 1 November, will also broaden the scope of time-of-use pricing and improve the peak-valley tariff mechanism.

So what will higher industrial electricity prices mean for the packaging and printing sector?

China's packaging and printing industry is among the most electrified and automated in the world, with productivity that sits at the very top globally — outpacing many European and American converters. Yet that same electrification brings hefty power bills: once tariffs climb sharply, production costs quickly spiral out of control.

Two publicly reported cases offer a clear picture of how power-hungry packaging and printing operations are.

In September 2020, Shangyou News reported that Chongqing Hongjin Printing Co., Ltd. in Nan'an District carried out a digital transformation, converting its conventional station building into a digital one. Management efficiency improved, employee working hours fell by 50%, labour costs were cut by 150,000 yuan a year, air compressor station power consumption dropped roughly 15%, and annual electricity savings exceeded 250,000 kWh.

Those figures imply that Chongqing Hongjin's air compressor station alone uses about 1.67 million kWh a year, with total plant consumption conservatively estimated in the millions of kWh. Applying Guangdong's 25% peak-price increase and a peak rate of 1 yuan per kWh, the compressor station's electricity cost alone would rise by 410,000 yuan.

A second case: Chutai Packaging Co., Ltd. in Xiangyang, Hubei, operates 11 production lines with daily output of 15,000 sets and daily power use of 14,000 kWh at full capacity. Under Guangdong's rates, peak-period electricity costs would climb by 3,500 yuan per day — 105,000 yuan per month.

Already squeezed by raw material, labour and environmental compliance costs, hardly any packaging and printing business can absorb such a steep rise in electricity costs.

Over the past six months, the PPI-CPI scissors gap has kept widening, pushing the packaging and printing industry into price inversion and leaving business conditions precarious. The only way to relieve the pressure: raise prices.

Source: China Packaging Network (pack.cn). Original link: http://news.pack.cn/show-378392.html