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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, 09 February 22
OIL PRICES: "IT'S GOING TO BE VERY EASY" TO GET TO $100/BARREL, ANALYST SAYS - YAHOO FINANCE
Energy and oil prices have been on fire over the last six months — and expect them to go higher, says one analyst.
“For ...
Wednesday, 09 February 22
MARKET INSIGHT - INTERMODAL
Iron ore prices have jumped significantly in the week prior to the Chinese New Year with traders and producers stocking up on raw materials. China& ...
Wednesday, 09 February 22
FEBRUARY HBA HITS RECORD HIGH IN 2022 ON INDONESIA’S EXPORT BAN IN JANUARY, WORSEN SUPPLY, UKRAINE TENSIONS
COALspot.com: Indonesian Coal Price Reference for February in a steep climb from January 2022.
As expected in January the Indonesia ...
Wednesday, 09 February 22
CHINESE COAL MARKS BEST DAY IN 4 MONTHS ON TIGHT SUPPLY, HIGH DEMAND - REUTERS
China’s coal futures on Tuesday recorded their best session since Bejing’s mid-October intervention to cool runaway prices, aided by co ...
Friday, 04 February 22
RENEWABLES ON THE RISE, COAL CONTINUOUSLY FALLING - EUROPEAN COMMISSION
Although oil (34.5%) and natural gas (23.7%) were still the most important fuel sources in the EU energy mix in 2020, renewable energy’s shar ...
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- Jaiprakash Power Ventures ltd
- Semirara Mining Corp, Philippines
- Essar Steel Hazira Ltd - India
- Kumho Petrochemical, South Korea
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- LBH Netherlands Bv - Netherlands
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Standard Chartered Bank - UAE
- White Energy Company Limited
- Baramulti Group, Indonesia
- Eastern Energy - Thailand
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Indian Oil Corporation Limited
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- Mintek Dendrill Indonesia
- Goldman Sachs - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Ceylon Electricity Board - Sri Lanka
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- GVK Power & Infra Limited - India
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- Africa Commodities Group - South Africa
- Indonesian Coal Mining Association
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Australian Coal Association
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- PTC India Limited - India
- ICICI Bank Limited - India
- Parliament of New Zealand
- The Treasury - Australian Government
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- London Commodity Brokers - England
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Aboitiz Power Corporation - Philippines
- Interocean Group of Companies - India
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- Rashtriya Ispat Nigam Limited - India
- Sinarmas Energy and Mining - Indonesia
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- Simpson Spence & Young - Indonesia
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
- Independent Power Producers Association of India
- MS Steel International - UAE
- The University of Queensland
- Jorong Barutama Greston.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Bangladesh Power Developement Board
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Wilmar Investment Holdings
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Power Finance Corporation Ltd., India
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- IEA Clean Coal Centre - UK
- Globalindo Alam Lestari - Indonesia
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Barasentosa Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- ASAPP Information Group - India
- Aditya Birla Group - India
- Meralco Power Generation, Philippines
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Merrill Lynch Commodities Europe
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
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