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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, 26 January 23
AUSTRALIA'S CORONADO GLOBAL SEES COAL PRICES RISING ON RESUMING CHINA IMPORTS - REUTERS
Australia’s Coronado Global Resources said on Tuesday resuming metallurgical coal imports to China would likely push sea-borne coal prices hi ...
Monday, 23 January 23
CHINA'S MAJOR COAL-PRODUCING PROVINCE ACCELERATES DIGITAL TRANSFORMATION - XINHUA
At Chindata Group’s big-data industrial park in Lingqiu County of Datong City, hundreds of thousands of servers are running round-the-clock t ...
Monday, 23 January 23
CHINA'S COAL-RICH PROVINCE SEES COAL PRODUCTION INCREASE IN 2022 - XINHUA
North China’s coal-rich province of Shanxi saw its coal production hit 1.31 billion tonnes in 2022, up 8.7 percent year on year, local author ...
Wednesday, 18 January 23
MARKET INSIGHT - INTERMODAL
From Feb 5, another price cap will be introduced to Russian fuels and oil products, adding to the one for crude oil, already in place from Dec. 3. ...
Tuesday, 17 January 23
FRAUD IS THE BIGGEST THREAT TO CARGO LOSSES - TT CLUB
The almost exclusive use of online facilities to process business transactions allows a myriad of fraudulent pursuits to find opportunities within ...
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- SN Aboitiz Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Directorate Of Revenue Intelligence - India
- Orica Australia Pty. Ltd.
- Mercuria Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kalimantan Lumbung Energi - Indonesia
- Africa Commodities Group - South Africa
- Antam Resourcindo - Indonesia
- Global Coal Blending Company Limited - Australia
- Standard Chartered Bank - UAE
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- McConnell Dowell - Australia
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Australian Coal Association
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Mercator Lines Limited - India
- VISA Power Limited - India
- Jindal Steel & Power Ltd - India
- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- SMG Consultants - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- Bhoruka Overseas - Indonesia
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Kobexindo Tractors - Indoneisa
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- MS Steel International - UAE
- Electricity Authority, New Zealand
- Eastern Energy - Thailand
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- Sarangani Energy Corporation, Philippines
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- ASAPP Information Group - India
- India Bulls Power Limited - India
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Parliament of New Zealand
- CNBM International Corporation - China
- Goldman Sachs - Singapore
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- Parry Sugars Refinery, India
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Holcim Trading Pte Ltd - Singapore
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- ICICI Bank Limited - India
- White Energy Company Limited
- Cement Manufacturers Association - India
- The University of Queensland
- Orica Mining Services - Indonesia
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- Coal and Oil Company - UAE
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Grasim Industreis Ltd - India
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- Toyota Tsusho Corporation, Japan
- Timah Investasi Mineral - Indoneisa
- Sindya Power Generating Company Private Ltd
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Billiton Holdings Pty Ltd - Australia
- Sojitz Corporation - Japan
- Banpu Public Company Limited - Thailand
- Marubeni Corporation - India
- Mintek Dendrill Indonesia
- Planning Commission, India
- Bulk Trading Sa - Switzerland
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Sree Jayajothi Cements Limited - India
- IHS Mccloskey Coal Group - USA
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Karaikal Port Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- San Jose City I Power Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Wilmar Investment Holdings
- Deloitte Consulting - India
- Meenaskhi Energy Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- Renaissance Capital - South Africa
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- Minerals Council of Australia
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
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