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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, 26 May 22
MARKET INSIGHT - INTERMODAL
The newbuilding market activity has been significantly positive from a dry bulk owner perspective during the first half of 2022. Indeed, the contra ...
Wednesday, 18 May 22
INDONESIAN COAL PRICE REFERENCE DROPPED 4.42% IN MAY
COALspot.com: Indonesian Coal Price Reference for May delivery drops 4.42 per cent month on month.
The Indonesian Coal Price Referen ...
Thursday, 12 May 22
MARKET INSIGHT - INTERMODAL
Almost through half of the year, the overall shipping market continues to show signs of healthiness, after plenty of festivities and holidays that ...
Wednesday, 27 April 22
EUROPEAN UNION'S LNG IMPORTS - BANCHERO COSTA
In 2021, the European Union (27) was the third largest seaborne importer of LNG in the world, with a 15.8% share.
It followed Mainla ...
Tuesday, 26 April 22
CHINA'S APPETITE FOR BAUXITE HITS NEW RECORD AS Q1 IMPORTS JUMP 15.4% Y/Y - BIMCO
Bauxite shipments arriving in China hit new record levels in the first quarter of 2022 and grew at an average annual rate of 12.8% between 2017 and ...
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- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- Lanco Infratech Ltd - India
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
- London Commodity Brokers - England
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- Tata Chemicals Ltd - India
- Meralco Power Generation, Philippines
- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Aboitiz Power Corporation - Philippines
- Sakthi Sugars Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Carbofer General Trading SA - India
- VISA Power Limited - India
- Barasentosa Lestari - Indonesia
- New Zealand Coal & Carbon
- Ministry of Transport, Egypt
- Sarangani Energy Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Georgia Ports Authority, United States
- Siam City Cement PLC, Thailand
- Indika Energy - Indonesia
- Posco Energy - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- Asmin Koalindo Tuhup - Indonesia
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chamber of Mines of South Africa
- Orica Mining Services - Indonesia
- Central Java Power - Indonesia
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Orica Australia Pty. Ltd.
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Coal and Oil Company - UAE
- Australian Coal Association
- Eastern Coal Council - USA
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Indonesian Coal Mining Association
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- The Treasury - Australian Government
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Kalimantan Lumbung Energi - Indonesia
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
- Mintek Dendrill Indonesia
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- Indian Oil Corporation Limited
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- SMG Consultants - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Goldman Sachs - Singapore
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- CNBM International Corporation - China
- Gujarat Mineral Development Corp Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- ICICI Bank Limited - India
- Madhucon Powers Ltd - India
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- San Jose City I Power Corp, Philippines
- Thiess Contractors Indonesia
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- Jaiprakash Power Ventures ltd
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Commonwealth Bank - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- OPG Power Generation Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Africa Commodities Group - South Africa
- Singapore Mercantile Exchange
- Bulk Trading Sa - Switzerland
- International Coal Ventures Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Makarim & Taira - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Wilmar Investment Holdings
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- Romanian Commodities Exchange
- Kohat Cement Company Ltd. - Pakistan
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- Mercator Lines Limited - India
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Dalmia Cement Bharat India
- The University of Queensland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coalindo Energy - Indonesia
- Petron Corporation, Philippines
- Economic Council, Georgia
- Planning Commission, India
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
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