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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, 17 January 23
CHINA'S SHANXI TARGETS 2023 COAL PRODUCTION OF NEARLY 1.37B TONS - XINHUA
China’s coal-rich province of Shanxi has set a coal production target of nearly 1.37 billion metric tons for 2023, according to a government ...
Tuesday, 17 January 23
MARKET INSIGHT - INTERMODAL
Rumor has it that the New Year has come, to set the pace in, for Russia to continue hostilities against Ukraine. Ten months on the go, into Russia& ...
Tuesday, 17 January 23
INDONESIA IS ACCOUNTING FOR 32.3% OF THE GLOBAL SEABORNE COAL MARKET IN 2022 - BENCHERO 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, Benchero ...
Tuesday, 10 January 23
INDONESIAN HBA IS SEEING A SPIKE IN JANUARY 2023 INSTEAD OF A SIGNIFICANT FALL IN DECEMBER 2022
COALspot.com: Indonesian Coal Price Reference up 8.43% in January 2023.
HBA is seeing a dramatic spike in January 2023 i ...
Sunday, 08 January 23
INDIAN COAL POWER PLANTS SHOULD BE COMPENSATED FOR 2022 FORCED GENERATION – REGULATOR : REUTERS
Indian power plants that rely on imported coal should be fully compensated when forced to supply electricity, the country’s power regulator s ...
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- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Barasentosa Lestari - Indonesia
- IHS Mccloskey Coal Group - USA
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- OPG Power Generation Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- Sindya Power Generating Company Private Ltd
- Wilmar Investment Holdings
- Mercator Lines Limited - India
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Kideco Jaya Agung - Indonesia
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Semirara Mining Corp, Philippines
- Posco Energy - South Korea
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- ASAPP Information Group - India
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Indian Oil Corporation Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Straits Asia Resources Limited - Singapore
- Siam City Cement - Thailand
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Bayan Resources Tbk. - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Chettinad Cement Corporation Ltd - India
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- ICICI Bank Limited - India
- Simpson Spence & Young - Indonesia
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- Vedanta Resources Plc - India
- Jaiprakash Power Ventures ltd
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- The Treasury - Australian Government
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- Mjunction Services Limited - India
- Globalindo Alam Lestari - Indonesia
- Renaissance Capital - South Africa
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Energy Development Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- Planning Commission, India
- Kaltim Prima Coal - Indonesia
- Sical Logistics Limited - India
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- London Commodity Brokers - England
- Kapuas Tunggal Persada - Indonesia
- Oldendorff Carriers - Singapore
- Bukit Makmur.PT - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- Bhoruka Overseas - Indonesia
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Mercuria Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- White Energy Company Limited
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- VISA Power Limited - India
- Thai Mozambique Logistica
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
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