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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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Wednesday, 06 July 22
MARKET INSIGHT - INTERMODAL
Following the 3rd Decarbonizing Shipping Forum, held in Hamburg on June 2022, there has been a meaningful resurgence of discussions within the ship ...
Tuesday, 05 July 22
WHY ARE VLSFO PRICES SO HIGH, ESPECIALLY IN SINGAPORE? - STEVE CHRISTY, INTEGR8 FUELS
Tightness in products still trumps talks of recession
Last month we wrote about the fears of recession versus the tightness in product markets ...
Tuesday, 05 July 22
ADANI ENTERPRISES LOWEST BIDDER IN COAL INDIA'S IMPORT TENDER: REPORT - BUSINESS STANDARD
Coal India Ltd floated its first import tender on behalf of power companies, where Adani Enterprises Ltd came out to be the lowest bidder, a report ...
Tuesday, 05 July 22
CHINA POLICY KEY FOR IRON ORE OUTLOOK - ING
China’s covid lockdowns and recessionary risks hit iron ore
Iron ore prices have fallen significantly from their year-to-date high of US$ ...
Monday, 04 July 22
INDONESIAN COAL PRICE REFERENCE SLIGHTLY DOWN IN JULY
COALspot.com: Indonesian Coal Price Reference for July delivery drops 1.52 per cent month on month.
The Indonesian Coal Price Refere ...
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- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- Planning Commission, India
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Coalindo Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- Coastal Gujarat Power Limited - India
- Jindal Steel & Power Ltd - India
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- ASAPP Information Group - India
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- CNBM International Corporation - China
- Bhoruka Overseas - Indonesia
- Bhatia International Limited - India
- European Bulk Services B.V. - Netherlands
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Indika Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Australian Coal Association
- ICICI Bank Limited - India
- PTC India Limited - India
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Central Java Power - Indonesia
- Barasentosa Lestari - Indonesia
- Tamil Nadu electricity Board
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Mercator Lines Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- The State Trading Corporation of India Ltd
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Baramulti Group, Indonesia
- GAC Shipping (India) Pvt Ltd
- OPG Power Generation Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Petron Corporation, Philippines
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Wood Mackenzie - Singapore
- VISA Power Limited - India
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Energy Link Ltd, New Zealand
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- Carbofer General Trading SA - India
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Medco Energi Mining Internasional
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- Indian Energy Exchange, India
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