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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, 13 October 21
MARKET INSIGHT - INTERMODAL
Following up on our insight on May 2021, where we discussed about the Capesize market outlook for the second half of the year, we are pleased to se ...
Wednesday, 13 October 21
FBX INDEX: THE IMPOSSIBILITY OF SHORT-TERM FORECASTING - LARS JENSEN
Will freight rates on Asia-Europe or the Transpacific reach 40.000 USD/FFE in the run-up prior to Chinese New Year 2022? Or will they start droppin ...
Wednesday, 13 October 21
CHINA FLOODS: COAL PRICE HITS FRESH HIGH AS MINES SHUT - BBC
The price of coal used in China’s power plants has surged to a new record high as another of the country’s key mining regions is hit by ...
Tuesday, 12 October 21
BUMA SIGNS CONDITIONAL AGREEMENT FOR AUSTRALIAN ASSET ACQUISITION
PT Tbk. announced that its subsidiary, PT Bukit Makmur Mandiri Utama, through its newly incorporated Australian subsidiary, BUMA International Pty ...
Tuesday, 12 October 21
INDONESIA'S COAL-BASED POWER PLANTS ARE SUBJECT TO CARBON TAX NEXT YEAR, ELECTRICITY COSTS COULD RISE! - CNBC
The Indonesian government is planning plans to implement a carbon tax of IDR 30 per kilogram (kg) of carbon dioxide equivalent (CO2e) or equivalent ...
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Directorate Of Revenue Intelligence - India
- Mercuria Energy - Indonesia
- Port Waratah Coal Services - Australia
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- Vizag Seaport Private Limited - India
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- SMC Global Power, Philippines
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Sical Logistics Limited - India
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- Ind-Barath Power Infra Limited - India
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- Videocon Industries ltd - India
- Oldendorff Carriers - Singapore
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- GMR Energy Limited - India
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- Minerals Council of Australia
- Pipit Mutiara Jaya. PT, Indonesia
- ASAPP Information Group - India
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Borneo Indobara - Indonesia
- Georgia Ports Authority, United States
- Sindya Power Generating Company Private Ltd
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- Attock Cement Pakistan Limited
- CIMB Investment Bank - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Australian Coal Association
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Leighton Contractors Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Cement Manufacturers Association - India
- Coalindo Energy - Indonesia
- Economic Council, Georgia
- Singapore Mercantile Exchange
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- PowerSource Philippines DevCo
- Standard Chartered Bank - UAE
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Independent Power Producers Association of India
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Petron Corporation, Philippines
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Mintek Dendrill Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- San Jose City I Power Corp, Philippines
- Metalloyd Limited - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- Parliament of New Zealand
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
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