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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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Saturday, 25 March 23
COAL INDIA HAS STRONG CASE TO INCREASE PRICES, TALKS ON: CMD AGRAWAL - BUSINESS STANDARD
Coal India (CIL) Chairman and Managing Director Pramod Agrawal said on Monday there is a “strong case” for increasing coal prices, and ...
Saturday, 25 March 23
ASIAN CRUDE PALM OIL WATCH 1Q23 - FITCH RATINGS
Malaysian benchmark crude palm oil (CPO) spot prices have averaged around USD915 per tonne (t) so far in 1Q23, sharply lower than the average of ar ...
Saturday, 25 March 23
INDONESIA’S COAL EXPORT INCREASED BY 21.0% YOY TO 388.4 MLN T IN 2022 - BANCHERO COSTA
After a slow start in the first quarter, global coal trade has really picked up pace last year, and is now fully back to pre-Covid levels. In the f ...
Saturday, 25 March 23
GLOBAL LNG-ASIA SPOT PRICES SLIP AS WEAK NORTHERN DEMAND REMAINS - REUTERS
Asian spot prices of liquefied natural gas (LNG) declined this week, falling to a 21-month low, as weak demand in the northeast Asia region continu ...
Wednesday, 22 March 23
OIL PRICE FALL SPECULATIVE, TO HIT $140 BY YEAR-END -ANDURAND: REUTERS
The recent fall in oil prices due to banking jitters is speculative and oil will hit $140 a barrel by the end of the year, hedge fund manager Pierr ...
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- Africa Commodities Group - South Africa
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- Planning Commission, India
- Australian Commodity Traders Exchange
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indonesian Coal Mining Association
- Tamil Nadu electricity Board
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Bangladesh Power Developement Board
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- LBH Netherlands Bv - Netherlands
- Bulk Trading Sa - Switzerland
- Xindia Steels Limited - India
- Global Business Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- Bukit Baiduri Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Makmur.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- SN Aboitiz Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- McConnell Dowell - Australia
- Global Green Power PLC Corporation, Philippines
- Uttam Galva Steels Limited - India
- Mintek Dendrill Indonesia
- Toyota Tsusho Corporation, Japan
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- CIMB Investment Bank - Malaysia
- PTC India Limited - India
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- Grasim Industreis Ltd - India
- Electricity Generating Authority of Thailand
- Ind-Barath Power Infra Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Cigading International Bulk Terminal - Indonesia
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Sarangani Energy Corporation, Philippines
- Star Paper Mills Limited - India
- Wilmar Investment Holdings
- Central Electricity Authority - India
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- Semirara Mining Corp, Philippines
- Central Java Power - Indonesia
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
- Energy Development Corp, Philippines
- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Independent Power Producers Association of India
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Australian Coal Association
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Latin American Coal - Colombia
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Tata Chemicals Ltd - India
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Aditya Birla Group - India
- White Energy Company Limited
- Sical Logistics Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- Goldman Sachs - Singapore
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Marubeni Corporation - India
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
- Medco Energi Mining Internasional
- Vizag Seaport Private Limited - India
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- Baramulti Group, Indonesia
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- Bahari Cakrawala Sebuku - Indonesia
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Sakthi Sugars Limited - India
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Sree Jayajothi Cements Limited - India
- Kapuas Tunggal Persada - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Sinarmas Energy and Mining - Indonesia
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Georgia Ports Authority, United States
- Bhatia International Limited - India
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
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