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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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Sunday, 29 April 12
THE FREIGHT MARKET EXPECTED TO BE STEADY NEXT WEEK - VISTAAR
COALspot.com - The BDI continued to go up with the support of Panamax/Supramax and was up by 8.34 pct closing at 1,156 points.
The cape index was ...
Sunday, 29 April 12
INDONESIAN SUB-BITUMINOUS COAL SWAPS FOR MAY 2012 DELIVERY WAS STABLE THIS WEEK
COALspot.com - Indonesian sub-bituminous coal swaps for May deliveries stable this week, according to DSP of SGX AsiaClear OTC Coal Swaps. In the me ...
Friday, 27 April 12
BUKIT ASAMS NET INCOME UP 14% IN 1Q 2012 (UNAUDITED)
Press Release - PT Bukit Asam (Persero) Tbk, announced the Consolidated Financial Statements and Subsidiaries per 31 March 2012 (Unaudited).
Reve ...
Thursday, 26 April 12
AUSTRALIAS COKAL EXPANDS MET COAL POTENTIAL INTO WEST KALIMANTAN
COALspot.com - Global metallurgical coal group Cokal Limited (Cokal) (ASX:CKA) announced today it has completed the acquisition of 75.2% of PT Silan ...
Thursday, 26 April 12
BUKIT ASAMS 1Q OPERATING PROFIT MARGIN HAS INCREASED BY 6% TO RP. 1 TRILLION
COALspot.com - PT. Bukit Asam (Persero), the Indonesia’s state owned coal miner's 1Q, 2012 revenue has increased by 31% to Rp. 3.02 trillion ...
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- Electricity Generating Authority of Thailand
- Larsen & Toubro Limited - India
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- Economic Council, Georgia
- Sical Logistics Limited - India
- Mercator Lines Limited - India
- Bhoruka Overseas - Indonesia
- Latin American Coal - Colombia
- Coal and Oil Company - UAE
- Independent Power Producers Association of India
- IEA Clean Coal Centre - UK
- Dalmia Cement Bharat India
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- Romanian Commodities Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- Toyota Tsusho Corporation, Japan
- Iligan Light & Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- India Bulls Power Limited - India
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- Bhushan Steel Limited - India
- Tata Chemicals Ltd - India
- Siam City Cement PLC, Thailand
- Meenaskhi Energy Private Limited - India
- Carbofer General Trading SA - India
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- GN Power Mariveles Coal Plant, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- PTC India Limited - India
- Metalloyd Limited - United Kingdom
- Xindia Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- IHS Mccloskey Coal Group - USA
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- Star Paper Mills Limited - India
- Krishnapatnam Port Company Ltd. - India
- Singapore Mercantile Exchange
- Global Coal Blending Company Limited - Australia
- Kobexindo Tractors - Indoneisa
- Edison Trading Spa - Italy
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- MS Steel International - UAE
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indogreen Group - Indonesia
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Thiess Contractors Indonesia
- Kideco Jaya Agung - Indonesia
- Ambuja Cements Ltd - India
- Agrawal Coal Company - India
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kohat Cement Company Ltd. - Pakistan
- GAC Shipping (India) Pvt Ltd
- Petron Corporation, Philippines
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- Minerals Council of Australia
- Salva Resources Pvt Ltd - India
- Videocon Industries ltd - India
- Standard Chartered Bank - UAE
- Ceylon Electricity Board - Sri Lanka
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- Central Java Power - Indonesia
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- Gujarat Sidhee Cement - India
- Siam City Cement - Thailand
- Global Business Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Posco Energy - South Korea
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