The province is also China’s hub for lithium mining – a key component in electric car batteries – and the shutdown could raise the cost of the raw material, analysts said.
Sichuan, one of China’s largest provinces with 84 million people, asked 19 of 21 cities in the region to halt production at all factories from Monday to Saturday, according to an “urgent notice” issued on Sunday by the provincial government and the state network.
The decision was taken to ensure that enough electricity is available for residential use, the notice states.
Closing factories for the week could tighten supplies of polysilicon and lithium and push prices higher, Daiwa Capital analysts said in a note to clients.
Several Chinese companies have warned that their production could be affected by the power outage in Sichuan, including Sichuan Haowu Electromechanical, a maker of auto parts, and Sichuan Lutianhua, which produces fertilizers and chemical products.
Apart from Sichuan, other major Chinese provinces – including Jiangsu, Anhui and Zhejiang – have also urged businesses and households to conserve power as the heat wave has depleted electrical supplies.
In some regions, offices have been ordered to increase the AC temperature to above 26 degrees Celsius or turn off elevator services for the first three floors to save electricity.
The extreme heat in China has also resulted in crop failures in many parts of the country, contributing to inflationary pressures last month.
He pointed out that the extreme heat has caused drought in some agricultural areas in the south. In the north, rainfall and flooding also led to some crop failures.
“August and September are the key periods for the formation of autumn grain production. [We must] Pay close attention to the impact of natural disasters, insects and diseases on our country’s food production,” he added.