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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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Monday, 25 October 21
A QUESTION OF POSSESSION - THE BALTIC EXCHANGE
Possession and tangibility are closely related concepts long established under English law. Yet a change to these concepts is around the corner. Th ...
Monday, 25 October 21
CHINA VOWS TO SEVERELY PUNISH MARKET VIOLATIONS AMID LOW COAL FUTURES PRICES - GLOBAL TIMES
Domestic coal futures had plunged for three consecutive trading days after the government vowed to crack down on soaring prices, and China’s ...
Monday, 25 October 21
FARMERS MAY JOIN THE COAL COMMODITY MARKET TO REDUCE RISKS - GLOBAL TIMES
A recent trip to by the Global Times to East China’s Shandong Province to get a glimpse of China’s coal supply chain revealed a surpris ...
Monday, 25 October 21
CHINA COAL PRICES MARK WORST WEEK SINCE MAY ON GOVERNMENT INTERVENTION - REUTERS
China’s thermal coal futures plunged on Friday and turned in their worst week in five months, following Beijing’s strongest interventio ...
Friday, 22 October 21
THE BIG PICTURE: ENERGY MARKETS - BREAK WAVE ADVISORS
The shipping markets have been pulled further into wild markets of coal and other energy sources. Given how nebulous this sector is, it’s alw ...
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- Maharashtra Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- Malabar Cements Ltd - India
- Riau Bara Harum - Indonesia
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- McConnell Dowell - Australia
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Indonesian Coal Mining Association
- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Gujarat Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- ICICI Bank Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- Global Business Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indika Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Marubeni Corporation - India
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Chamber of Mines of South Africa
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- Rio Tinto Coal - Australia
- Australian Coal Association
- Interocean Group of Companies - India
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- TeaM Sual Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Timah Investasi Mineral - Indoneisa
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- SMG Consultants - Indonesia
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- Deloitte Consulting - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- London Commodity Brokers - England
- Sical Logistics Limited - India
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- LBH Netherlands Bv - Netherlands
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- Energy Development Corp, Philippines
- Attock Cement Pakistan Limited
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Indian Oil Corporation Limited
- Meralco Power Generation, Philippines
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Africa Commodities Group - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- Xindia Steels Limited - India
- Bhatia International Limited - India
- Trasteel International SA, Italy
- The University of Queensland
- Kalimantan Lumbung Energi - Indonesia
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- Meenaskhi Energy Private Limited - India
- Bukit Makmur.PT - Indonesia
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- Orica Mining Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Singapore Mercantile Exchange
- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- Globalindo Alam Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Antam Resourcindo - Indonesia
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- Makarim & Taira - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Romanian Commodities Exchange
- Carbofer General Trading SA - India
- Jaiprakash Power Ventures ltd
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- Gujarat Sidhee Cement - India
- Ceylon Electricity Board - Sri Lanka
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Krishnapatnam Port Company Ltd. - India
- Bulk Trading Sa - Switzerland
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Simpson Spence & Young - Indonesia
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Cigading International Bulk Terminal - Indonesia
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
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