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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, 03 February 22
COAL SHORTAGE NOW AT ALARMING LEVELS, SAY ALUMINIUM PRODUCERS - IANS
With no relief in sight despite coal stocks running critically low and production disruptions looming across the Indian aluminium sector, the Alumi ...
Wednesday, 02 February 22
HIGH COKING COAL PRICES PROVIDE GLIMPSE INTO STEELMAKING'S FUTURE - MCKINSEY
Last year was a volatile one in global commodity markets. Demand for coking coal, an essential raw material in the production of steel, was extreme ...
Wednesday, 02 February 22
INDONESIA'S RESTRICTIONS ON COMMODITIES RATTLE MARKETS, MORE MOVES LIKELY - REUTERS
In just the first month of this year, Indonesian policymakers have rattled global markets with restrictions on some of its biggest commodities expo ...
Wednesday, 02 February 22
CHINA'S TOP COAL PRODUCER FORECASTS 28 PCT PROFIT GROWTH IN 2021 - XINHUA
China Shenhua Energy Company Limited, one of the country’s biggest coal producers, said its net profits are expected to jump by 28 percent in ...
Wednesday, 02 February 22
COAL STORAGE IN CHINA’S POWER PLANTS NEAR RECORD HIGHS - XINHUA
Coal inflows into China’s power plants have picked up, bringing their coal storage to near record highs, the National Development and Reform ...
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- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- Sical Logistics Limited - India
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Oldendorff Carriers - Singapore
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Bayan Resources Tbk. - Indonesia
- CNBM International Corporation - China
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- PTC India Limited - India
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Wilmar Investment Holdings
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Petron Corporation, Philippines
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- Port Waratah Coal Services - Australia
- London Commodity Brokers - England
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- GMR Energy Limited - India
- ASAPP Information Group - India
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- Mercator Lines Limited - India
- Minerals Council of Australia
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Orica Australia Pty. Ltd.
- Bhatia International Limited - India
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- GVK Power & Infra Limited - India
- MS Steel International - UAE
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cement Manufacturers Association - India
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- Indonesian Coal Mining Association
- Bhoruka Overseas - Indonesia
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- Billiton Holdings Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- Agrawal Coal Company - India
- Romanian Commodities Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Directorate Of Revenue Intelligence - India
- VISA Power Limited - India
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Planning Commission, India
- Uttam Galva Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Videocon Industries ltd - India
- Pendopo Energi Batubara - Indonesia
- Tamil Nadu electricity Board
- Coal and Oil Company - UAE
- Sakthi Sugars Limited - India
- Mercuria Energy - Indonesia
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Asmin Koalindo Tuhup - Indonesia
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Parry Sugars Refinery, India
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Trasteel International SA, Italy
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Globalindo Alam Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Economic Council, Georgia
- Vedanta Resources Plc - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
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