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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, 28 April 21
MARKET INSIGHT - INTERMODAL
Despite the current challenges as a result of the global pandemic, 2021 is turning out to be a landmark year for the iron ore market with spot pric ...
Monday, 26 April 21
CHINA TO FURTHER CUT COAL USE IN 2021 - XINHUA
China aims to reduce the share of coal in its energy mix to less than 56% this year, according to a guideline released by the National Energy Admin ...
Wednesday, 21 April 21
COAL FINANCING COSTS HAVE SURGED IN PAST 10 YEARS - UNIVERSITY OF OXFORD - THE GUARDIAN
Coal financing costs have surged over the last decade as investors demand returns four times as high as the payoff required from renewable energy p ...
Tuesday, 20 April 21
US DOLLAR LIBOR TRANSITION IN ASSET FINANCE - WHERE ARE WE NOW? - WATSON FARLEY & WILLIAMS
Since our last article, there has been a raft of regulatory and market body announcements relating to the transition away from LIBOR and the follow ...
Sunday, 18 April 21
INDONESIA LIKELY TO WITNESS 119 OIL AND GAS PROJECTS STARTS ACROSS VALUE CHAIN BY 2025, SAYS GLOBALDATA
Indonesia is expected to witness 119 oil and gas projects commencing their operations across value chain during 2021-2025, accounting for 6% of the ...
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- Anglo American - United Kingdom
- Deloitte Consulting - India
- Central Java Power - Indonesia
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Vedanta Resources Plc - India
- Sree Jayajothi Cements Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Planning Commission, India
- Bharathi Cement Corporation - India
- Chettinad Cement Corporation Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Essar Steel Hazira Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Semirara Mining Corp, Philippines
- South Luzon Thermal Energy Corporation
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- London Commodity Brokers - England
- Singapore Mercantile Exchange
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indika Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- Central Electricity Authority - India
- Timah Investasi Mineral - Indoneisa
- ICICI Bank Limited - India
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Bukit Baiduri Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- Bayan Resources Tbk. - Indonesia
- Karaikal Port Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Billiton Holdings Pty Ltd - Australia
- Bangladesh Power Developement Board
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- Thai Mozambique Logistica
- Metalloyd Limited - United Kingdom
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- PNOC Exploration Corporation - Philippines
- Rio Tinto Coal - Australia
- San Jose City I Power Corp, Philippines
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- The Treasury - Australian Government
- Renaissance Capital - South Africa
- Baramulti Group, Indonesia
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Agrawal Coal Company - India
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- Global Green Power PLC Corporation, Philippines
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- Heidelberg Cement - Germany
- Power Finance Corporation Ltd., India
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Ministry of Mines - Canada
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Ministry of Transport, Egypt
- Vijayanagar Sugar Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- Kartika Selabumi Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The State Trading Corporation of India Ltd
- Trasteel International SA, Italy
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
- Bhushan Steel Limited - India
- The University of Queensland
- Siam City Cement - Thailand
- Chamber of Mines of South Africa
- Global Business Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
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