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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, 13 February 24
WHAT IS THE OUTLOOK FOR THE NATURAL GAS SPOT PRICE IN 2024 AND 2025? EIA
We expect the U.S. benchmark Henry Hub natural gas spot price to average higher in 2024 and 2025 than in 2023, but to remain lower than $3.00 per m ...
Monday, 12 February 24
US THERMAL COAL EXPORTS HIT 5-YEAR HIGHS AND TOP $5 BLN IN 2023 - REUTERS
United States exporters of thermal coal earned more than $5 billion in 2023 as they shipped out more than 32.5 million metric tons of the high-poll ...
Tuesday, 06 February 24
NEW E-FUELS PROJECT TO MAKE INTERNATIONAL SHIPPING CLIMATE-NEUTRAL - RINA
Transport and trade on the ocean blue must be made much greener. This is the goal of the new €17 million European GAMMA project, where compani ...
Tuesday, 06 February 24
INDIA SEES ANNUAL COAL OUTPUT UP 10.9% IN 2024/25 - REUTERS
India expects domestic coal output to increase by 10.9% to 1.13 billion metric tons in the fiscal year ending March 2025, a senior government offic ...
Tuesday, 06 February 24
INDIA'S COAL PRODUCTION INCREASES BY 10.3% TO 99.73 MILLION TONNE IN JANUARY - PTI
The country’s coal output rose 10.3 per cent to 99.73 Million Tonne (MT) in January, over the same month in the previous fiscal.
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- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- Thiess Contractors Indonesia
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sical Logistics Limited - India
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- Tata Chemicals Ltd - India
- Merrill Lynch Commodities Europe
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Kumho Petrochemical, South Korea
- Chamber of Mines of South Africa
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Economic Council, Georgia
- Trasteel International SA, Italy
- Kobexindo Tractors - Indoneisa
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Planning Commission, India
- Siam City Cement - Thailand
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Timah Investasi Mineral - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
- Australian Coal Association
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- Altura Mining Limited, Indonesia
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- GMR Energy Limited - India
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- SN Aboitiz Power Inc, Philippines
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- LBH Netherlands Bv - Netherlands
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Carbofer General Trading SA - India
- Ind-Barath Power Infra Limited - India
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Parliament of New Zealand
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Baramulti Group, Indonesia
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- Latin American Coal - Colombia
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- Ministry of Transport, Egypt
- Power Finance Corporation Ltd., India
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- Central Electricity Authority - India
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Globalindo Alam Lestari - Indonesia
- The University of Queensland
- Siam City Cement PLC, Thailand
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Wilmar Investment Holdings
- Cigading International Bulk Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Mercuria Energy - Indonesia
- Coal and Oil Company - UAE
- PowerSource Philippines DevCo
- Independent Power Producers Association of India
- Indogreen Group - Indonesia
- ASAPP Information Group - India
- GN Power Mariveles Coal Plant, Philippines
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Energy Link Ltd, New Zealand
- Kaltim Prima Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Banpu Public Company Limited - Thailand
- Attock Cement Pakistan Limited
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- Sakthi Sugars Limited - India
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