Thermal power projects will accelerate or will benefit the cable market

China's electricity consumption increased by 15% year-on-year in 2010, and rose by 10% and 12% year-on-year to 343,3 billion kWh and 3,124 billion kWh respectively in August of this year and the first eight months of 2011. Electricity consumption is beginning to rebound strongly in 2008 and 2009, after the financial tsunami erupted, after a slight 5% to 6% young growth. Thermal power generation is the main source of electrical energy, accounting for more than 80% of total electricity generation. It increased by 14% year-on-year in the first eight months of 2011. During this period, the average utilization hours of thermal power equipment jumped 4% year-on-year to 3,557 hours, showing excellent performance. The average utilization time of the overall power equipment is 2%. The use of hours to reach the highest level since 2007 indicates that orders will increase.

According to the data from the China Electricity Council, the estimated power gap in 2011 is 30GW. According to forecasts of State Grid officials, excess demand is expected to exceed 40 GW of supply, and this gap will further expand to 50 GW and 70 GW in 2012 and 2013. The National Energy Administration stated that in order to reduce the gap between electricity supply and demand, the approval and construction of thermal power projects will accelerate. We believe that the shortage of power will prompt the rapid expansion of thermal power generation, which will help increase the number of new thermal equipment orders for power equipment manufacturers. According to data from the National Bureau of Statistics, China’s power equipment output rose strongly by 19% and 21% respectively in August and the first eight months of 2011, compared to the year-on-year decline of 12% in 2009 and the year-on-year increase of 8% in 2010. The data is undoubtedly a significant improvement. Thermal power equipment, which accounts for about 70% of total power equipment output, rose 17% year-on-year in the first eight months of 2011.