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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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Thursday, 30 June 22
WHY ARE LNG SHIPPING STOCKS RESILIENT? - DREWRY
LNG shipping stocks are proving resilient despite uncertainties about growth in global GDP, high inflation and the ongoing geopolitical crisis caus ...
Thursday, 30 June 22
SPOT AUSTRALIAN THERMAL COAL HAS SURGED, BUT CONTRACT PRICE IS KEY - REUTERS
The spot price of Australian thermal coal is higher than that of coking coal, an unprecedented situation that highlights just how the global market ...
Thursday, 30 June 22
SHANXI PROVINCE RAISES ANNUAL COAL OUTPUT TO 1.3 BILLION TONS TO ENSURE CHINA’S ENERGY SUPPLY - GLOBAL TIMES
North China’s Shanxi Province, a major coal-producing region, recently announced a move to increase its annual coal production output by 107 ...
Thursday, 30 June 22
DIVERGENCE BETWEEN HIGH- AND LOW-GRADE THERMAL COAL PRICES IN APAC TO NARROW - FITCH RATINGS
Prices between high- and low-grade thermal coal in Asia-Pacific (APAC) have diverged since late March 2022, but Fitch Ratings expects the gap to na ...
Thursday, 30 June 22
INVESTMENT IN GLOBAL COAL SUPPLY CHAIN TO HIT $115 BN IN 2022, LED BY CHINA AND INDIA - BUSINESS LINE
At over $80 billion, China and India are anticipated to make up the bulk of global coal investment in 2022, says IEA.
The investment ...
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- Aboitiz Power Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Trasteel International SA, Italy
- Semirara Mining Corp, Philippines
- Mercuria Energy - Indonesia
- Australian Coal Association
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Essar Steel Hazira Ltd - India
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- McConnell Dowell - Australia
- Wilmar Investment Holdings
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Price Waterhouse Coopers - Russia
- Maheswari Brothers Coal Limited - India
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- Sarangani Energy Corporation, Philippines
- Baramulti Group, Indonesia
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- Ministry of Mines - Canada
- Parliament of New Zealand
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Malabar Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- Deloitte Consulting - India
- Jorong Barutama Greston.PT - Indonesia
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Orica Mining Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kartika Selabumi Mining - Indonesia
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Rashtriya Ispat Nigam Limited - India
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Economic Council, Georgia
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Mintek Dendrill Indonesia
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Coalindo Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Holcim Trading Pte Ltd - Singapore
- Sakthi Sugars Limited - India
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Altura Mining Limited, Indonesia
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Toyota Tsusho Corporation, Japan
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- Bukit Baiduri Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- Siam City Cement PLC, Thailand
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- South Luzon Thermal Energy Corporation
- Central Java Power - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Energy Development Corp, Philippines
- Tata Chemicals Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Metalloyd Limited - United Kingdom
- European Bulk Services B.V. - Netherlands
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- The University of Queensland
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Planning Commission, India
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- Attock Cement Pakistan Limited
- Lanco Infratech Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Bulk Trading Sa - Switzerland
- Bhoruka Overseas - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- IHS Mccloskey Coal Group - USA
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Krishnapatnam Port Company Ltd. - India
- Vizag Seaport Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
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