Sumary of From coal to cars, Chinese floods tangle supply chains:
- Power had been partly restored and some trains and flights were running on Thursday but analysts said disruption could last for several days, pushing up prices and slowing business across densely populated Henan and neighboring provinces.
- Zhengzhou, Henan’s capital of 12 million people, 650 km (400 miles) southwest of Beijing, is the junction for the major north-south and east-west high-speed rail lines, with connections to most major Chinese cities from one of Asia’s largest stations.
- “As Zhengzhou is a top national transportation hub and Henan province is a major producer of grains, raw materials and some manufactured products like iPhones, we believe the rainfall and flooding will have a material impact on business activity and inflation in the short term,” Nomura analysts wrote.
- The floods poured into subway lines and washed away thousands of cars, killing at least 33 people, cutting road links and knocking out power and cellphone service to many parts of the region.
- China’s largest automaker, SAIC Motor, warned of short-term impact on logistics at its Zhengzhou plant, while Japan’s Nissan said production at its factory had been suspended.
- With more than 200,000 hectares of Henan farmland hit by flooding, SDIC Essence Futures analysts warned of the impact to the maturing peanut crop.
- But the flooding should also trigger the release of pent-up demand for consumption and investment, said the Nomura analysts, especially for cars and infrastructure.
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