COVID-19 outbreak prompts shutdowns in Chinese manufacturing hub

People wearing face masks following the coronavirus disease (COVID-19) outbreak walk on a street in Shanghai, China, December 14, 2021. | Photo courtesy of Aly Song – REUTERS

SHANGHAI — Multiple companies have suspended operations in one of China’s biggest manufacturing hubs as local authorities try to contain a COVID-19 outbreak, halting production of goods from batteries to textile dyes and plastics.

At least 20 listed companies have shut operations in virus-hit areas in Zhejiang, an eastern province with a large industrial sector that accounts for around 6% of China’s GDP and where many goods are manufactured for export.

Tens of thousands of Zhejiang residents are in quarantine and some domestic flights have been suspended as a national health official said the outbreak in three cities – Ningbo, Shaoxing and Hangzhou – was developing at a “relatively rapid” speed.

The three cities accounted for more than 50% of the province’s economic output of around 6.46 trillion yuan ($1.02 trillion) last year.

Zhejiang reported 44 locally transmitted cases with confirmed symptoms on Dec. 13, official data showed on Tuesday, taking the total to 217 just over a week since the first case was reported on Dec. 6. Prior to the current outbreak, the province had reported just one local case this year.

Companies reporting suspended production on Tuesday included Zhejiang Mustang Battery Co, Guobang Pharma Ltd and textile dyes maker Zhejiang Runtu Co.

Ningo-based Mustang Battery said it expected the outbreak to be brought under control very soon, and the production suspension was a temporary measure that “will not have a long-term negative impact on the company’s growth.”

Zhejiang Runtu said all its units in the Zhejiang Shangyu Economic Development Zone (SEDZ), which accounts for 95% of its revenue, had been halted since Dec. 9 and it expected a negative impact on its fourth quarter results.

There are more than 350 industrial enterprises in the zone, which is located near the cities of Ningbo, Hangzhou, Shanghai, Suzhou and Wenzhou.

Ningbo Homelink Eco-Itech Co, Zhejiang Zhongxin Fluoride Materials Co, Zhejiang Jingsheng Mechanical & Electrical Co and Zhejiang Fenglong Electric Co have also suspended work in affected areas.

The companies said they halted operations in line with local government orders in Zhenhai district in Ningbo and Shangyu district in Shaoxing, which curtailed all production bar essential manufacturing.

The orders cover all companies in the affected areas, but only listed firms are required to disclose any impact on their business.

Major industries in Zhenhai, which has a port, include manufacturing of precision machinery and chemicals. The district also hosts factories with investments by more than 700 foreign companies including LG Electronics Inc and Toshiba Corp, according to the Zhenhai government’s website.

Sinopec’s Zhenhai Refining and Chemicals, the biggest oil refinery in China, said on Tuesday it was maintaining a high operational rate despite tightened COVID measures. The refinery, which has annual crude oil refining capacity of 460,000 barrels-per-day, is currently processing 60,000 tonnes of crude oil each day, the company said in statement.

More than 50,000 people have been quarantined at centralised facilities across the coastal province of 64.4 million, while a further nearly half a million people were being monitored.

($1 = 6.3631 yuan)

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