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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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Friday, 04 May 12
DEMOLITION KEY FOR DRY BULK MARKET RECOVERY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The overflow of newbuilding vessels which “spilled over” into 2012 from 2011 brought the dry bulk market to a near collapse level at the ...
Thursday, 03 May 12
DRY BULK MARKET REMAINS INACTIVE, POSTING MILD DECREASE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept retreating this week, although at a very low pace, on the back of a lull in demand. The industry's benchmark, th ...
Thursday, 03 May 12
MINERS DEMAND LEGAL CERTAINTY ON PRE-BAN INTERIM POLICY - THE JAKARTA POST
The Jakarta Post reported that, Mining companies represented by the Indonesian Mining Association (IMA) welcomed the government’s plan to impo ...
Thursday, 03 May 12
HANDY EAST COAST INDIA - CHINA AROUND USD 7000 - FEARNLEYS AS
Handy - Stable demand in the Atlantic offered good rates for the tonnage.
USG/Cont was worth USD 17500 and more. Baltic and Black Sea appeared to ...
Tuesday, 01 May 12
VIETNAM FEARS IT MAY NOT SEEK COAL SUPPLIES - TBKTSG / VIETNAMNET BRIDGE
TBKTSG / VietNamNet Bridge reported that, with five coal-run thermopower plants under construction, PetroVietnam alone would need 18 million tons of ...
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- Intertek Mineral Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Madhucon Powers Ltd - India
- LBH Netherlands Bv - Netherlands
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Bukit Baiduri Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- TeaM Sual Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Australian Commodity Traders Exchange
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- Barasentosa Lestari - Indonesia
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- Formosa Plastics Group - Taiwan
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Energy Link Ltd, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Mintek Dendrill Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- The Treasury - Australian Government
- Straits Asia Resources Limited - Singapore
- Bayan Resources Tbk. - Indonesia
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- CNBM International Corporation - China
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Videocon Industries ltd - India
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Ind-Barath Power Infra Limited - India
- CIMB Investment Bank - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Globalindo Alam Lestari - Indonesia
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Anglo American - United Kingdom
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
- Xindia Steels Limited - India
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- The University of Queensland
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Parliament of New Zealand
- PTC India Limited - India
- Indian Energy Exchange, India
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asmin Koalindo Tuhup - Indonesia
- Bangladesh Power Developement Board
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Africa Commodities Group - South Africa
- Economic Council, Georgia
- New Zealand Coal & Carbon
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- PetroVietnam Power Coal Import and Supply Company
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Marubeni Corporation - India
- Central Java Power - Indonesia
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- Eastern Energy - Thailand
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- Ambuja Cements Ltd - India
- Merrill Lynch Commodities Europe
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Thiess Contractors Indonesia
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