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Wednesday, 06 January 16
NEW COAL PRICE PASS-THROUGH REGULATION BENEFITS CHINA IPPS - FITCH RATINGS
Fitch Ratings says the new Coal Price Pass-through Mechanism announced by the National Development and Reform Commission (NDRC) on 31 December 2015 will bring highervisibility and stability to China's independent power producers' (IPPs) earnings.
This new mechanism gives a much clearer guidance on the benchmark coal price for reference and when the tariff adjustments will occur, unlike the previous mechanism which did not provide clear details on these items.
The NDRC announced a cut in the on-grid power tariff for thermal power of CNY0.03 per kilo-watt hour (kwh) effective from 1 January 2016 - which the agency considers to be modest compared to the drop in Qinghuangdao coal prices of around 17% since the last tariff revision in April 2015. The tariff reduction is also moderate compared to the end-2015 dark spread for China coal fired plants of around CNY0.25/kwh as estimated by the agency. Nonetheless, we believe the tariff cut may negatively impact thermal power producers whose utilisation hours are under pressure.
The NDRC launched new China Thermal Coal Price Indices by province in September 2015, which will serve as a reference for future tariff adjustments. The new tariff framework will result in annual tariff adjustments by referring to thermal coal prices in 2014 as the benchmark coal price. The review will take place at the end of every year, and adjustments will be effective from 1 January in the following year.
The new mechanism also sets different pass-through factors of between 0.8x to 1.0x for coal price changes of between CNY 30 to 150/ton from 2014 levels; any changes beyond this range will not be passed through. The effective pass-through of cost changes will vary from 0 to 71% within this band of coal price variations. This is lower than the 90% under previous regulations. However, we do not see a high risk of spreads materially contracting for power producers in the foreseeable future as the benchmark coal price (of 2014) is more than 20% higher than current coal price levels, and given our expectation of subdued coal prices in the medium-term.
The new mechanism also introduced an automatic pass-through of a coal-fired power on-grid tariff to commercial and industrial (C&I) retail power tariff, subject to a K-factor adjustment to account for cross-subsidies and various surcharges. Fitch believes that the Chinese government took advantage of current low coal prices to rationalize the relationship between coal prices, the coal-fired power on-grid tariff and the C&I retail power tariff.
However, this new mechanism only regulates the benchmark on-grid tariff, while power tariffs for "market power" through direct purchases by large customers or the power market exchange programme are not covered. While the new tariff regulations provide more clarity and certainty to thermal power producers, Fitch believes that coal-fired power IPPs will continue to face challenges with weakened utilization hours due to low power consumption growth and the addition of large amounts of thermal and renewable power capacity in the medium-term. Although current power sold through the power market or direct purchase is relatively small (less than 10%), more and more power is likely to be sold under the "market power" scheme as an increasing number of provinces will introduce such programs. IPPs also have a strong incentive to participate in "market power" programmes to gain higher utilization, albeit at discounted tariffs.
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Wednesday, 11 November 15
VESSEL VALUES ARE DOWN BY AT LEAST 20% SINCE MID-AUGUST - INTERMODAL
I had promised not to spend another broker’s insight focusing on the dry bulk side. However, the sale of the M/V Churchill Bulker (179,362 dw ...
Tuesday, 10 November 15
SELF-HEATING OF COAL HAS EMPHASISED THE IMPORTANCE OF CHECKING THE ACCURACY OF SHIPPER'S DECLARATIONS - GARD
Recent incidents involving self-heating of coal has emphasised the importance of checking the accuracy of shipper’s declarations for all type ...
Tuesday, 10 November 15
API 5 FOB NEWCASTLE COAL SWAP SLIDES CONTINUE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $3.55 per ton (8.50%) month over month to US$ 38.20 per ton. The swap ...
Monday, 09 November 15
BUNKER PRICES TO KEEP SLIDING THIS WEEK, EXPERT SAYS - MARINE BUNKER EXCHANGE
The oil price volatility has continued this week. Two dollars up one day and the next day two dollars down. The oil market has been trading on the ...
Monday, 09 November 15
CFR SOUTH CHINA THERMAL COAL SWAP FOR Q3' 16 CONTRACT DECLINED US$ 4 PER TON
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 4.35 (9.03 %) per ton month over month.
A commodity swa ...
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- Offshore Bulk Terminal Pte Ltd, Singapore
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Trasteel International SA, Italy
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Metalloyd Limited - United Kingdom
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Mjunction Services Limited - India
- Central Electricity Authority - India
- PTC India Limited - India
- Madhucon Powers Ltd - India
- CNBM International Corporation - China
- Jorong Barutama Greston.PT - Indonesia
- Anglo American - United Kingdom
- Ministry of Transport, Egypt
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- VISA Power Limited - India
- Sindya Power Generating Company Private Ltd
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Holcim Trading Pte Ltd - Singapore
- Africa Commodities Group - South Africa
- IHS Mccloskey Coal Group - USA
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Grasim Industreis Ltd - India
- Indian Energy Exchange, India
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Price Waterhouse Coopers - Russia
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Independent Power Producers Association of India
- Orica Mining Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Sarangani Energy Corporation, Philippines
- New Zealand Coal & Carbon
- Pipit Mutiara Jaya. PT, Indonesia
- Thiess Contractors Indonesia
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- Jindal Steel & Power Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- Savvy Resources Ltd - HongKong
- Wilmar Investment Holdings
- Eastern Coal Council - USA
- Mintek Dendrill Indonesia
- McConnell Dowell - Australia
- GMR Energy Limited - India
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Petron Corporation, Philippines
- Parliament of New Zealand
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- Renaissance Capital - South Africa
- Cement Manufacturers Association - India
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- Heidelberg Cement - Germany
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Ind-Barath Power Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Coastal Gujarat Power Limited - India
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- Borneo Indobara - Indonesia
- Dalmia Cement Bharat India
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- SMC Global Power, Philippines
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- Leighton Contractors Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Larsen & Toubro Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- Australian Coal Association
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Bhushan Steel Limited - India
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- Agrawal Coal Company - India
- Simpson Spence & Young - Indonesia
- Riau Bara Harum - Indonesia
- Indogreen Group - Indonesia
- Kepco SPC Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
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