Gas prices in the EU and the UK slumped from recent highs but remain elevated, impacting base chemicals production, among others, said Swiss trading software and information platform operator, Kemiex​​.

Its latest analysis shows that a raft of cooling measures recently announced by China to tame runaway coal prices and ease a power crunch have seen a significant reduction in the price for thermal coal, which is used to produce electricity in that market.

Those measures also had the impact of lowering the price of yellow phosphorus, which is a component in fertilizer and battery production as well as phosphates mixes, and is also used in vitamin C 35%, or as an intermediate for active ingredients such as vitamin B6, said Kemiex’s Stefan Schmidinger.

“The massive drop in coal prices enforced by China’s market supervision authorities leaves some hope for upcoming downside risk in prices and better supply availability, but certainly not before corrective policies on carbon emissions will show effects,”​ he commented.

The unintentional consequence of China’s energy consumption and carbon emission control policies has been lower production in multiple industries across several regions, with some factories only operating two days a week or at 70% capacity, after negative emissions reporting, found analysts.

Combined, the surging coal prices, power shortages and strict ecological policies slowed economic growth in the third quarter and are now threatening to spill over to supply chains in the fourth quarter, said Kemiex.