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Thursday, 22 December 22
COAL AND GAS PRICE CAPS MAY COMPOUND POLITICAL RISK FOR AUSTRALIAN CORPORATES - FITCH RATINGS
 Australia’s introduction of temporary price caps on domestic sales of gas and coal used for electricity generation will probably have limited direct near-term credit impact for energy-sector issuers rated by Fitch Ratings, according to the agency. However, the caps highlight that energy companies face mounting political risks that could influence investor perceptions of the sector and capex plans over the long term.
The caps have been proposed for 12 months, but even if they are extended, the direct impact should generally be limited if prices for coal and gas fall over the coming years, in line with Fitch’s base-case assumptions.
The near-term impact on Australian thermal coal miners’ financial profiles will be further mitigated, as typically around 80% of the thermal coal produced in the country is exported, and therefore is not subject to the cap.
The natural gas sector will be more exposed, as domestic demand accounts for a larger share of supply. Santos (BBB/Stable) and Woodside Energy Group (BBB+/Stable) are large suppliers of gas to the domestic market. Such sales account for more than 40% of Santos’s gas production, but we estimate that only around 15% of total production goes to the east coast markets that are exposed to the price cap.
Woodside’s domestic gas sales, including pipeline gas from the NWS Project, Pluto and Wheatstone, account for less than 6% of its gas production, with the rest exported as LNG. For both companies, most gas is already produced under long-term contracts, which will be unaffected by the caps, limiting the near-term impact. The proportion of output affected could nonetheless rise over time if the caps are extended beyond 12 months.
The prevalence of long-term supply contracts will also reduce the impact of the caps for most domestic electricity and gas retailers, including Origin Energy (BBB/Stable). If global energy prices remain high, it is possible that the caps could offer a competitive advantage to some retailers that rely more on short-term supply contracts. That said, the superior sourcing ability and flexibility in contracts should limit downside risks for large retailers. For electricity sales, the highest-cost power generator generally determines the wholesale energy market price, and we anticipate a neutral to marginally positive financial effect for entities like Origin that have flexibility in their generation portfolio.
The price caps will add to a perception that Australia’s mining sector faces mounting political risk, even though we do not believe they will have a major impact on Fitch-rated issuers in the near term. For example, the government has announced plans to implement a new system to protect sites important to Australia’s indigenous peoples. Firms in the sector, as in other parts of the world, also face political risks associated with official efforts to promote the transition to renewable energy sources.
Mounting political risk may influence investors’ perceptions of the sector, and therefore the terms on which companies are able to access finance. This could also have ramifications for M&A plans or long-term capex strategies. Nonetheless, it is likely to take time to assess the impact, which may also be offset by other market developments.
Australia’s parliament on 16 December passed legislation empowering the government to regulate gas prices, alongside an AUD1.5 billion relief package for firms and households. It remains unclear how the relief package will affect power and gas market dynamics, but we expect its impact to be temporary. The authorities plan to cap domestic gas prices at AUD12 per gigajoule. Domestic thermal coal sales prices in New South Wales and Queensland will also be capped at AUD125 per tonne.
Source: Fitch Ratings
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Friday, 22 July 22
MARKET INSIGHT - INTERMODAL
Faced with uncertainty regarding the most cost-efficient alternative fuels and the future dominant method to reduce their greenhouse emissions, man ...
Friday, 22 July 22
YANCOAL AUSTRALIA CUTS 2022 COAL OUTPUT VIEW AS FLOODS, COVID BITE - REUTERS
Coal miner Yancoal Australia Ltd YAL.AX cut its 2022 output forecast on Wednesday, signalling a hit from higher-than-expected rainfall, COVID-19-le ...
Wednesday, 20 July 22
BOOST FOR BIOFUELS AS IMO REMOVES REGULATORY HURDLE - GARD
MARPOL Annex VI regulations were written for petroleum derived fuels but also apply to biofuels. It has been a challenge to meet the regulatory req ...
Wednesday, 20 July 22
INDONESIA’S COAL EXPORTS TO THE EU INCREASED SIGNIFICANTLY RECENTLY
European countries have increased coal imports from Indonesia due to the energy crisis that hit the region after Russia cuts gas exports to Europe. ...
Tuesday, 19 July 22
DRY BULK MARKET: CAPESIZE MARKET FIRMS THIS WEEK - BALTIC EXCHANGE
Capesize
Firmer sentiment across both basins pushed the Capesize 5TC route average above the $20,000 threshold this week, closing at $24,209. A ...
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- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Asmin Koalindo Tuhup - Indonesia
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- GAC Shipping (India) Pvt Ltd
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- Cement Manufacturers Association - India
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- Edison Trading Spa - Italy
- Coastal Gujarat Power Limited - India
- Formosa Plastics Group - Taiwan
- SN Aboitiz Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Parry Sugars Refinery, India
- Sinarmas Energy and Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Aditya Birla Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Tamil Nadu electricity Board
- Larsen & Toubro Limited - India
- Central Java Power - Indonesia
- The University of Queensland
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Miang Besar Coal Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- Globalindo Alam Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- The Treasury - Australian Government
- Uttam Galva Steels Limited - India
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- GVK Power & Infra Limited - India
- White Energy Company Limited
- South Luzon Thermal Energy Corporation
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Singapore Mercantile Exchange
- MS Steel International - UAE
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- SMC Global Power, Philippines
- Deloitte Consulting - India
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- OPG Power Generation Pvt Ltd - India
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- Chamber of Mines of South Africa
- Bayan Resources Tbk. - Indonesia
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Independent Power Producers Association of India
- Gujarat Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- Australian Commodity Traders Exchange
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Intertek Mineral Services - Indonesia
- Mintek Dendrill Indonesia
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- The State Trading Corporation of India Ltd
- Price Waterhouse Coopers - Russia
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Samtan Co., Ltd - South Korea
- Kaltim Prima Coal - Indonesia
- Indian Oil Corporation Limited
- Jaiprakash Power Ventures ltd
- Bangladesh Power Developement Board
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- Billiton Holdings Pty Ltd - Australia
- ASAPP Information Group - India
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