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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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Thursday, 25 March 21
'OMNIBUS LAW' REGULATION ON INDONESIA’S ENERGY AND MINING SECTORS TO BOOST COAL PROCESSING BUT ALSO RAISES QUESTIONS - ABNR
February 2021 saw the issuance of a raft of new government regulations to give effect to the reformist Job Creation Law (colloquially known as the ...
Thursday, 25 March 21
PROPOSED SWITCH FROM COAL TO LNG THREATENS RENEWABLE ENERGY DEVELOPMENT IN ASIA - IEEFA
Renewables offer an ever cheaper, financially sustainable and energy secure alternative, better able to support developing nations
A ...
Thursday, 25 March 21
MAJOR INVESTMENT ADVISORS BLACKROCK AND MEKETA PROVIDE A FIDUCIARY PATH THROUGH THE ENERGY TRANSITION - IEEFA
BlackRock and Meketa say divestment from fossil fuels improves, not weakens, investment returns
Two major financial management firms ...
Thursday, 25 March 21
EUROPE PASSES MILESTONE WITH HALF OF COAL PLANTS CLOSED OR SET TO RETIRE BY 2030 - EURACTIV
Half of Europe’s 324 coal-fueled power plants have either closed or announced a retirement date before 2030, it emerged on Monday (22 March) ...
Wednesday, 24 March 21
MARKET INSIGHT - INTERMODAL
Since the start of the pandemic, the shipping industry has efficiently responded to ensure the continuity of operations and hence the security of s ...
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- Independent Power Producers Association of India
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Bharathi Cement Corporation - India
- Australian Coal Association
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- Altura Mining Limited, Indonesia
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Uttam Galva Steels Limited - India
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Kaltim Prima Coal - Indonesia
- Georgia Ports Authority, United States
- Karaikal Port Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Anglo American - United Kingdom
- Mintek Dendrill Indonesia
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- Sarangani Energy Corporation, Philippines
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Bukit Baiduri Energy - Indonesia
- Energy Link Ltd, New Zealand
- Parry Sugars Refinery, India
- Sindya Power Generating Company Private Ltd
- New Zealand Coal & Carbon
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Aboitiz Power Corporation - Philippines
- Economic Council, Georgia
- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- IEA Clean Coal Centre - UK
- Wood Mackenzie - Singapore
- Marubeni Corporation - India
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pipit Mutiara Jaya. PT, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Meralco Power Generation, Philippines
- Timah Investasi Mineral - Indoneisa
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Essar Steel Hazira Ltd - India
- ASAPP Information Group - India
- Borneo Indobara - Indonesia
- Wilmar Investment Holdings
- Gujarat Mineral Development Corp Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- South Luzon Thermal Energy Corporation
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Indian Energy Exchange, India
- Port Waratah Coal Services - Australia
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Agrawal Coal Company - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- Coal and Oil Company - UAE
- CNBM International Corporation - China
- Lanco Infratech Ltd - India
- Kepco SPC Power Corporation, Philippines
- Dalmia Cement Bharat India
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Barasentosa Lestari - Indonesia
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Global Business Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Maheswari Brothers Coal Limited - India
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Formosa Plastics Group - Taiwan
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
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