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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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Thursday, 02 March 23
DRY BULK MARKET: THE WAY CHINA GOES, SO GOES THE MARKET - BIMCO
We expect demand growth within the 1.5-2.5% range in 2023, driven by China’s economic recovery. Improvements in consumer sentiment should hel ...
Thursday, 02 March 23
INDIA, CHINA DEMAND BOOST LOW-RANK THERMAL COAL PRICES IN ASIA - RUSSELL, REUTERS
Signs of stronger import demand from India have arrested the decline in price of the thermal coal grades most commonly sought by the world’s ...
Thursday, 02 March 23
INDIA CHEERS THE RETURN OF ‘KING COAL’ AS INDUSTRY SEES BUOYANT FUTURE - REUTERS
India’s coal industry celebrated the return of its major conference after a three-year pandemic hiatus by presenting a bullish view of demand ...
Wednesday, 01 March 23
GEO CONNECT ASIA RETURNS IN MARCH TO ACCELERATE THE REGION’S GEOSPATIAL AND LOCATION INTELLIGENCE CAPABILITIES
Press Release: The third edition of GCA will be held in conjunction with Digital Construction Asia and the inaugural Drones Asia – an event d ...
Wednesday, 01 March 23
THE DECLINE IN THE COAL PRICE SINCE THE BEGINNING OF THE YEAR HAS BEEN SIGNIFICANT - INTERMODAL
Last week, the front-month API2 future rose by 3.5%, but since the beginning of the year the future has fallen by 39% to $136.65/t, while the Newca ...
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- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- Posco Energy - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Bangladesh Power Developement Board
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Sinarmas Energy and Mining - Indonesia
- Aditya Birla Group - India
- Agrawal Coal Company - India
- PTC India Limited - India
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- International Coal Ventures Pvt Ltd - India
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Planning Commission, India
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- Karaikal Port Pvt Ltd - India
- New Zealand Coal & Carbon
- Formosa Plastics Group - Taiwan
- AsiaOL BioFuels Corp., Philippines
- Directorate General of MIneral and Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining and Power Corporation, Philippines
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Energy Link Ltd, New Zealand
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Marubeni Corporation - India
- Vijayanagar Sugar Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Power Finance Corporation Ltd., India
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Maheswari Brothers Coal Limited - India
- Therma Luzon, Inc, Philippines
- Barasentosa Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Independent Power Producers Association of India
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Australian Coal Association
- Madhucon Powers Ltd - India
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- India Bulls Power Limited - India
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Parry Sugars Refinery, India
- Riau Bara Harum - Indonesia
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Directorate Of Revenue Intelligence - India
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Ministry of Mines - Canada
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- Dalmia Cement Bharat India
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- Orica Australia Pty. Ltd.
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Vizag Seaport Private Limited - India
- The State Trading Corporation of India Ltd
- SN Aboitiz Power Inc, Philippines
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Bhatia International Limited - India
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- Metalloyd Limited - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- Baramulti Group, Indonesia
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Latin American Coal - Colombia
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Bhoruka Overseas - Indonesia
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Minerals Council of Australia
- ASAPP Information Group - India
- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Videocon Industries ltd - India
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