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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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Tuesday, 11 April 23
OIL RISES ON CHINA STIMULUS EXPECTATIONS, WEAKER DOLLAR - REUTERS
Oil prices rose on Tuesday on expectations of potential economic stimulus by China, healthy demand in the rest of Asia and a drop in U.S. crude sto ...
Sunday, 09 April 23
CHINA’S BUSINESS INCOME REBOUND POINTS TO IMPROVING ECONOMY: OFFICIAL - XINHUA
Chinese businesses have posted a strong rebound in sales revenue since the beginning of this year in the latest signal of an improving economy.
...
Sunday, 09 April 23
COAL INDIA TO BOOST SUPPLIES TO INDUSTRIES AS UTILITIES’ INVENTORIES RISE - REUTERS
Coal India Ltd will increase supplies to industries, the world’s largest coal miner said on Wednesday as fuel inventories at utilities run by ...
Thursday, 06 April 23
MARKET INSIGHT - INTERMODAL
LNG Current Supply/Demand Dynamics
This year, LNG supply will likely exceed demand, so prices will need to decline to levels that will encourag ...
Sunday, 26 March 23
EUROPE’S RUSH TO LNG COULD TURN INTO 'WORLD’S MOST EXPENSIVE AND UNNECESSARY INSURANCE POLICY'- CNBC
Europe’s rapid buildout of liquefied natural gas infrastructure is on track to far exceed demand by the end of the decade, according to new r ...
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Showing 111 to 115 news of total 6871 |
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- Sakthi Sugars Limited - India
- Xindia Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Banpu Public Company Limited - Thailand
- Central Electricity Authority - India
- Deloitte Consulting - India
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Lanco Infratech Ltd - India
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Heidelberg Cement - Germany
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Merrill Lynch Commodities Europe
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- Bukit Makmur.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bayan Resources Tbk. - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- Alfred C Toepfer International GmbH - Germany
- London Commodity Brokers - England
- Power Finance Corporation Ltd., India
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Intertek Mineral Services - Indonesia
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indo Tambangraya Megah - Indonesia
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Bharathi Cement Corporation - India
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Sojitz Corporation - Japan
- Planning Commission, India
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- Africa Commodities Group - South Africa
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- The University of Queensland
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- White Energy Company Limited
- Binh Thuan Hamico - Vietnam
- Star Paper Mills Limited - India
- Videocon Industries ltd - India
- Makarim & Taira - Indonesia
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Georgia Ports Authority, United States
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- Energy Link Ltd, New Zealand
- Chettinad Cement Corporation Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Toyota Tsusho Corporation, Japan
- SN Aboitiz Power Inc, Philippines
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- GVK Power & Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Sindya Power Generating Company Private Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- GMR Energy Limited - India
- ICICI Bank Limited - India
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Aboitiz Power Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Indika Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Trasteel International SA, Italy
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Bhatia International Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Miang Besar Coal Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Jindal Steel & Power Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Mercuria Energy - Indonesia
- Dalmia Cement Bharat India
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Antam Resourcindo - Indonesia
- Renaissance Capital - South Africa
- Minerals Council of Australia
- Electricity Authority, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Singapore Mercantile Exchange
- Marubeni Corporation - India
- Agrawal Coal Company - India
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