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