Joachim Kattrup 
APPLE INC. (XNAS:AAPL)
AROUND 100,000 people have been evacuated from the central Chinese city of Zhengzhou, as record rainfall caused widespread flooding and economic disruptions to Henan province, home to the world’s biggest production base for iPhones and a major hub for food production and heavy industry.
Pictures published by state media showed large sections of roads submerged in Zhengzhou, a city of 10 million, while videos posted on social media showed passengers stuck inside flooded subway cars with water levels up to their shoulders and residents pulled to safety with ropes from fast moving floodwaters. State news agency Xinhua reported that 12 deaths had been confirmed so far.
The deluge has brought the equivalent of more than eight months’ worth of the city’s average rainfall since Tuesday, and has already interrupted the operations of at least one global company with manufacturing operations there. Nissan Motor Co Ltd. has temporarily halted production in Zhengzhou, according to a spokeswoman for the company. SAIC Motor Corp., China’s biggest automaker, said logistics around its factory in Zhengzhou have been impacted by the floods in the short term, but that the plant hasn’t been damaged.
Meanwhile Taiwan’s Hon Hai Precision Industry Co., which owns a massive iPhone production plant in Zhengzhou, said that it had activated an emergency response plan for flood control measures but that the flooding has had no direct impact on the facility.
Hon Hai’s plant receives components needed to assemble iPhones from global and domestic Chinese suppliers before shipping out the finished producers. The flooding struck just as the company prepares to ramp up output ahead of the launch of Apple, Inc.’s latest devices toward the end of the year.
The flooding in Henan may also impact China’s food supply. The province is the country’s second-largest food producer, accounts for about a quarter of the wheat harvest and is a major center for frozen food production. Henan is also the home of the world’s biggest pork processor WH Group Ltd., which acquired US meat production giant Smithfield Food, Inc. in 2013.
While China has already harvested its main wheat crop, earlier widespread rains impacted quality from areas including Henan. That is expected to drive up wheat imports by as much as 40% this year to the highest level since the mid-1990s, according to Bric Agriculture Group, a Beijing-based consulting firm. China has increased purchases from the US, Canada and Australia this year.
Other commodities have also been impacted by the flooding in Henan, which is a key hub for coal and metals. Some aluminum production and scrap-metal procurement has been halted or reduced, according to researcher Mysteel, citing its own survey.
On Wednesday, rescue workers and authorities continued to work to prevent dam breaches, restore lost power and pump out submerged gas stations. President Xi Jinping urged officials to step up disaster relief measures, state broadcaster CCTV reported. Inbound flights to Zhengzhou have also been suspended.
Zhengzhou saw 457.5 millimeters (18 inches) of rain fall in the 24 hours through 5 p.m. on Tuesday, the highest since records began for the city of more than 10 million people, Xinhua reported. That included a record 201.9 millimeters in a single hour, from 4 p.m. to 5 p.m, a record for mainland China. Zhengzhou typically receives average annual precipitation of about 640.8 millimeters.
The record rainfall came shortly after key Chinese cities warned that homes and factories face new power outages as historic demand and supply shortages strain energy grids. Eleven provinces including eastern manufacturing hubs and landlocked central China reported record demand and peak-load surges last week, amid hot weather. Henan already started banning exports of its coal supply to other areas last week amid concerns over energy supplies due to heavy rain.
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