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Wednesday, 02 May 12
CHINA BLACKOUTS HIGHLIGHT PRICING POLICY WEAKNESS - FITCH
 Fitch reported that, the likelihood of further electricity blackouts in China this summer underlines Fitch's view of the basic problem facing thermal electricity generators - that the tariff framework is not sustainable in the long term.
The problem centres on China's thermal or coal-fired plants, which in 2011 represented 72.5% of total electricity production of 4,692.8TWh, and are likely to remain the backbone of electricity generation for the foreseeable future. The problem is not with China's national electricity grid, which is well developed, but rather with the non-viability of the pricing mechanism for the coal-fired generators.
The Chinese thermal generators are unwilling to produce excess electricity in peak periods when their marginal generation costs are above the tariffs the government will allow them to charge the grid companies. Tariff adjustments have not been timely or sufficient despite the rising cost of coal, as the government has prioritised the management of inflation - thereby constraining profitability. The weak economics have also discouraged private-sector investment, while the state-linked thermal generators - Huaneng International ('BB+'/Stable), Datang International ('BB'/Stable), China Power International Development ('BB'/Stable), and Huadian International ('BB-'/Stable) - are now struggling with substantially weakened balance sheets.
Coal input prices for the thermal generators have increased dramatically over the past three years to end-2011, rising by an average of 16% pa. Meanwhile, the Chinese government has only allowed nationwide electricity tariffs to rise once in the last two years, by around 5% for non-residential customers in December 2011. Some tariff increases also occurred in selective provinces in April 2011, but the impact on generators' profitability was limited.
A 5% cap on annual coal price increases was introduced along with the December 2011 electricity tariff revision, but this applied only to contracted coal prices. These capped prices only represent around 30%-40% of the total needs of most thermal generators. Accordingly, large amounts of coal have to be bought on the spot market at substantially higher prices, making excess electricity production an uneconomic proposition. The substantial premium - typically 30% - on spot market prices against the capped contract coal price results in coal producers seeking ways to reduce their contracted sales in favour of spot sales, which is steadily eroding any benefit from the coal price caps.
A longer-term problem, and a potential cause of an eventual structural shortfall in generation capacity, is that limited profit - or losses - from thermal operations have since 2008 led to new capex in the industry being diverted away from thermal and into wind, hydro and vertical integration via coal mine acquisitions. A National Energy Administration (NEA) report dated 30 January 30 2012 confirmed that China's investment in thermal power assets fell again in 2011, by 26%, to CNY105.4bn. This trend, which cannot be reversed quickly due to the typical minimum two-year lead time to build new thermal capacity, is a serious concern given China's continued dependence on coal for its power generation.
The Chinese thermal generators are likely to face sustained weak operating cash flows and negative free cash generation under this heavily regulated environment, a situation which Fitch believes to be unsustainable in light of the continued growth in the Chinese economy. The agency believes that China is looking to introduce price reforms across the energy industries, but achieving a truly cost-reflective tariff regime is likely to take several more years, and will require a favourable inflationary climate. In the meantime, demand will continue to outstrip supply, even if - theoretically - the capacity exists within the generation system.
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Wednesday, 31 January 24
CHINA'S INNER MONGOLIA COAL OUTPUT HIT 1.21B TONS IN 2023 - XINHUA
North China’s Inner Mongolia autonomous region churned out 1.21 billion tons of coal in 2023 as it strives to guarantee the country’s e ...
Wednesday, 31 January 24
GAS EXPORTS COST U.S. CONSUMERS MORE THAN $100 BILLION OVER 16-MONTH PERIOD - IEEFA
Limited Demand Growth Could Dampen the Dry Bulk Market in the Coming Months BIMCOStarting in late 2021—before its invasion of Ukraine—R ...
Tuesday, 30 January 24
LIMITED DEMAND GROWTH COULD DAMPEN THE DRY BULK MARKET IN THE COMING MONTHS - BIMCO
Demand
In our base scenario, we expect cargo demand to grow by 0-1% in 2024 and 0.5-1.5% in 2025. This is a 0.5 percentage point reduction for ...
Friday, 26 January 24
RED SEA DIVERSIONS ADD NEARLY A MILLION DOLLARS PER VOYAGE TO SHIPPING COSTS WHILE DOUBLING TRANSIT TIME - LSEG
The incremental costs of diverting a tanker from Asia to NW Europe via the Cape of Good Hope is accounting for an extra $932,905 USD per voyage whi ...
Friday, 26 January 24
HARD COAL GUARDIAN ANGEL OF THE ENERGY SUPPLY - GERMANY COAL IMPORTERS ASSOCIATION
- No security of supply without hard coal
- The Substitute Power Plant Provision Act (EKBG) must be extended
- Higher grid fees due to the ...
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- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Meenaskhi Energy Private Limited - India
- Bulk Trading Sa - Switzerland
- Kumho Petrochemical, South Korea
- Indika Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bayan Resources Tbk. - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Minerals Council of Australia
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Pendopo Energi Batubara - Indonesia
- ASAPP Information Group - India
- Thiess Contractors Indonesia
- GMR Energy Limited - India
- Agrawal Coal Company - India
- Mercuria Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- Intertek Mineral Services - Indonesia
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- San Jose City I Power Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- Eastern Energy - Thailand
- Interocean Group of Companies - India
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Parliament of New Zealand
- CNBM International Corporation - China
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- MS Steel International - UAE
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PowerSource Philippines DevCo
- Timah Investasi Mineral - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- Singapore Mercantile Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- GVK Power & Infra Limited - India
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Wood Mackenzie - Singapore
- European Bulk Services B.V. - Netherlands
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Siam City Cement - Thailand
- Metalloyd Limited - United Kingdom
- Attock Cement Pakistan Limited
- Altura Mining Limited, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bangladesh Power Developement Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Aboitiz Power Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Orica Mining Services - Indonesia
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Australian Coal Association
- IEA Clean Coal Centre - UK
- Tata Chemicals Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Vizag Seaport Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Central Electricity Authority - India
- Ministry of Transport, Egypt
- GN Power Mariveles Coal Plant, Philippines
- Mjunction Services Limited - India
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Trasteel International SA, Italy
- Bukit Baiduri Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- Sree Jayajothi Cements Limited - India
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Neyveli Lignite Corporation Ltd, - India
- Petron Corporation, Philippines
- Wilmar Investment Holdings
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- SMG Consultants - Indonesia
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- Chettinad Cement Corporation Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Medco Energi Mining Internasional
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parry Sugars Refinery, India
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
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