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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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- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Riau Bara Harum - Indonesia
- Dalmia Cement Bharat India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- Australian Coal Association
- Mercuria Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Sree Jayajothi Cements Limited - India
- Malabar Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Jindal Steel & Power Ltd - India
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- Agrawal Coal Company - India
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- New Zealand Coal & Carbon
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- Directorate Of Revenue Intelligence - India
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- GMR Energy Limited - India
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- Holcim Trading Pte Ltd - Singapore
- London Commodity Brokers - England
- Singapore Mercantile Exchange
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- MS Steel International - UAE
- Chamber of Mines of South Africa
- PTC India Limited - India
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Sakthi Sugars Limited - India
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- The Treasury - Australian Government
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- CNBM International Corporation - China
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- Mjunction Services Limited - India
- Jaiprakash Power Ventures ltd
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- Siam City Cement - Thailand
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- Marubeni Corporation - India
- Wilmar Investment Holdings
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Merrill Lynch Commodities Europe
- OPG Power Generation Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Independent Power Producers Association of India
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Kohat Cement Company Ltd. - Pakistan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- Coalindo Energy - Indonesia
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Minerals Council of Australia
- Bharathi Cement Corporation - India
- Ambuja Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Planning Commission, India
- Miang Besar Coal Terminal - Indonesia
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