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Thursday, 23 September 21
RECORD-HIGH GAS PRICES AFFECT MANY EUROPEAN CORPORATE SECTORS - FITCH RATINGS
 Record-high natural gas prices are putting pressure on supply chains of many European corporate sectors, including non-integrated energy suppliers, fertiliser producers and consumer goods companies, Fitch Ratings says. Smaller companies in these industries are under the most pressure, while larger and more diversified issuers rated by Fitch are better positioned to mitigate the impact. Gas prices could remain high until the end of the winter heating season, given low levels of natural gas in European storage facilities. However, we expect prices to moderate once seasonal demand reduces.
High gas prices and working capital fluctuations have already caused several non-integrated UK gas suppliers (not rated by Fitch) to ask for state support in fulfilling their supply obligations to customers.
The Spanish government has introduced a levy on low-carbon power producers to support smaller suppliers.
Supply is typically a small part of larger Fitch-rated integrated utilities in Europe, which are able to pass costs on to most customer groups, or hedge. Although we expect higher gas prices to increase regulatory risks, the rated utilities’ diversification by jurisdiction and business line, including electricity production and distribution networks, cushions the impact. The unfolding situation in the European gas market may further accelerate the energy transition in the utility sector towards renewables.
Fertiliser producers have been severely affected by rising gas prices. Gas is a key input in ammonia production, which is further used in urea and DAP production. Several ammonia plants in Europe have cut their output or have temporarily shut down operations. Larger Fitch-rated fertiliser producers with a global presence are able to continue production in other regions or source ammonia from third parties, limiting the impact. Producers may also seek to increase fertiliser prices to pass costs onto consumers.
Agriculture and food producers are affected by challenges in the fertiliser sector. Agribusinesses may face shortages in fertiliser supplies and increased prices, most likely increasing their costs in the next season’s harvest. However, meat processors and carbonated drinks manufacturers, particularly in the UK, already face disruptions due to CO2 shortages, which is a by-product of ammonia manufacturing and is used in meat and fizzy drinks production. Geographically diversified food and beverages producers are better positioned to mitigate such shortages.
The record-high prices in Europe are driven by increased demand (due to the wider economic recovery and weather-related factors), competition with Asia for LNG, and a limited supply response from Gazprom, Europe’s largest supplier, providing about a third of Europe’s gas. Prices have also risen due to market fears of a gas deficit during the winter heating season due to low European storage utilisation compared to previous years.
Utilisation at Gazprom-linked storage facilities (around 10% of European capacity) is particularly low, affecting average utilisation rates in Austria, Germany and the Netherlands. Furthermore, unlike September in recent years, Gazprom has not offered any meaningful volumes for delivery this or next year via its electronic sales platform (a sales channel for short-term gas deliveries, used in addition to sales under long-term contracts). Gazprom’s total exports should increase in 2021 but this is unlikely to be sufficient to re-balance the market. Starting the new Nord Stream 2 pipeline, which is facing difficulties in obtaining necessary approvals from regulators in Europe, may affect the availability of additional gas volumes.
We have recently increased our short-term gas price assumptions. However, we expect a normalisation of demand and potential additional supplies to result in a return to mid-cycle pricing from 2023.
Source: Fitch Ratings
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Wednesday, 12 May 21
MARKET INSIGHT - INTERMODAL
Tanker S&P is finally back!
For an extended period, Dry bulk & Wet market rates have been diverging, with the SnP deals on each sect ...
Monday, 10 May 21
PAKISTAN: COAL GASIFICATION AND LIQUEFACTION HARMFUL TO ECONOMY - IEEFA
There is no second life for coal
Pakistan’s intention to use coal for power production through gasification and liquefaction technologie ...
Sunday, 09 May 21
HERE'S WHY INVESTORS ARE POURING MONEY INTO COAL, DESPITE ITS BLEAK FUTURE - FORBES
Coal stocks have surged this year – along with the wider energy sector – but experts warn these are likely short-term gains for an indu ...
Sunday, 09 May 21
MAYBANK TO STOP COAL FINANCING - BERNAMA
Malayan Banking Bhd (Maybank) will stop financing new coal activities as part of its sustainable agenda.
Currently, coal financing m ...
Saturday, 08 May 21
LNG-TO-POWER INVESTORS IN THE PHILIPPINES RISK EXPOSURE TO $14 BILLION IN STRANDED ASSETS - IEEFA
High regulatory and financial uncertainty in the Philippines market
The race to develop liquified natural gas (LNG) facilities in th ...
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- Aditya Birla Group - India
- ASAPP Information Group - India
- Makarim & Taira - Indonesia
- Electricity Generating Authority of Thailand
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- Bukit Asam (Persero) Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- Vizag Seaport Private Limited - India
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- Attock Cement Pakistan Limited
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- Medco Energi Mining Internasional
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMC Global Power, Philippines
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- Anglo American - United Kingdom
- Banpu Public Company Limited - Thailand
- The Treasury - Australian Government
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Uttam Galva Steels Limited - India
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Global Business Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- Iligan Light & Power Inc, Philippines
- Sojitz Corporation - Japan
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- MS Steel International - UAE
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Minerals Council of Australia
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
- Trasteel International SA, Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Interocean Group of Companies - India
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- TeaM Sual Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Vedanta Resources Plc - India
- Savvy Resources Ltd - HongKong
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Wilmar Investment Holdings
- Borneo Indobara - Indonesia
- Goldman Sachs - Singapore
- Africa Commodities Group - South Africa
- Essar Steel Hazira Ltd - India
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- Ministry of Finance - Indonesia
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- Coalindo Energy - Indonesia
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Mercator Lines Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Independent Power Producers Association of India
- Bhushan Steel Limited - India
- White Energy Company Limited
- Marubeni Corporation - India
- Mjunction Services Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- IHS Mccloskey Coal Group - USA
- Bukit Baiduri Energy - Indonesia
- Energy Link Ltd, New Zealand
- Economic Council, Georgia
- Sical Logistics Limited - India
- Dalmia Cement Bharat India
- OPG Power Generation Pvt Ltd - India
- Meralco Power Generation, Philippines
- Karaikal Port Pvt Ltd - India
- GVK Power & Infra Limited - India
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
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