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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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Wednesday, 25 April 12
CHINA IMPORTS 9.76 MMT AND INDIA IMPORTS 7.03 MMT OF INDONESIAN COAL LAST MONTH
COALspot.com: Indonesia, the world largest coal exporter, shipped 30.64* million tons of coal in March 2012, compared to 27.12* million tons i ...
Monday, 23 April 12
ALTURA ENTERS INTO AGREEMENT TO ACQUIRE 2 COAL PROJECTS IN SOUTH KALIMANTAN
COALspot.com - Altura Mining Limited (ASX: AJM) has announced that it has entered into an agreement to acquire a further two (2) Mining Permits (IUP ...
Sunday, 22 April 12
THE FREIGHT MARKET EXPECTED TO REMAIN FIRM NEXT WEEK - VISTAAR
COALspot.com - The BDI has broken the psychological barrier of 1000 points and closed at 1067 points.
The cape index was slightly down by 2.48 pc ...
Saturday, 21 April 12
INDONESIAN SUB-BITUMINOUS COAL SWAPS DROP 2.61 PERCENT THIS WEEK
COALspot.com - Indonesian sub-bituminous coal swaps fell for a fifth day, according to DSP of SGX AsiaClear OTC Coal Swaps.
CFR South China Coal ...
Friday, 20 April 12
PANAMAXES LEAD DRY BULK MARKET TO HIGHER GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A rebound of demand for smaller dry bulk carriers has led the industry’s benchmark, the BDI (Baltic Dry Index) above the 1,000-point mark for ...
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- Krishnapatnam Port Company Ltd. - India
- Global Business Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Star Paper Mills Limited - India
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- SMC Global Power, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Asmin Koalindo Tuhup - Indonesia
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Pendopo Energi Batubara - Indonesia
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- IHS Mccloskey Coal Group - USA
- AsiaOL BioFuels Corp., Philippines
- Kumho Petrochemical, South Korea
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Sakthi Sugars Limited - India
- Ceylon Electricity Board - Sri Lanka
- MS Steel International - UAE
- Heidelberg Cement - Germany
- Attock Cement Pakistan Limited
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Barasentosa Lestari - Indonesia
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- Edison Trading Spa - Italy
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Mercator Lines Limited - India
- Thiess Contractors Indonesia
- Bulk Trading Sa - Switzerland
- Salva Resources Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- Kaltim Prima Coal - Indonesia
- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Formosa Plastics Group - Taiwan
- Gujarat Sidhee Cement - India
- Ministry of Finance - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Africa Commodities Group - South Africa
- The Treasury - Australian Government
- VISA Power Limited - India
- Ministry of Transport, Egypt
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- Planning Commission, India
- Bukit Baiduri Energy - Indonesia
- Australian Coal Association
- Mercuria Energy - Indonesia
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
- Minerals Council of Australia
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Bhushan Steel Limited - India
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- Goldman Sachs - Singapore
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Global Coal Blending Company Limited - Australia
- The State Trading Corporation of India Ltd
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- South Luzon Thermal Energy Corporation
- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Globalindo Alam Lestari - Indonesia
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- Toyota Tsusho Corporation, Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aditya Birla Group - India
- Australian Commodity Traders Exchange
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- Samtan Co., Ltd - South Korea
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- Grasim Industreis Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Trasteel International SA, Italy
- Jindal Steel & Power Ltd - India
- Kobexindo Tractors - Indoneisa
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- Tamil Nadu electricity Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- Indika Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
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