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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, 26 January 22
MARKET INSIGHT - INTERMODAL
While it is logical that most of the S&P reports of the first weeks of the year are linked to very limited activity as reflected in the weekly ...
Wednesday, 26 January 22
INDONESIA: DME PROJECT IS ECONOMICALLY VIABLE AS STUDY DEMONSTRATES
The government is encouraging downstream coal processing or increase in coal added value, for example by turning coal into Dimethyl Ether (DME) to ...
Wednesday, 26 January 22
COMMODITY PRICES COULD SOAR IF THE RUSSIA-UKRAINE CRISIS ESCALATES - ING
It appears that a number of commodity markets are starting to at least price in some geopolitical risk around the growing tension between Russia an ...
Wednesday, 26 January 22
INDONESIA'S COAL BAN SENDS PRICES SOARING, OTHER EXPORTERS FAIL TO STEP UP - REUTERS
Indonesia’s short-lived ban on exporting coal has sent ructions through the seaborne market for the fuel in Asia, with the fallout likely to ...
Friday, 21 January 22
CHINA'S POWER TRADING TARIFFS TO RISE IN 2022 - FITCH RATINGS
Rising trading volume and higher-than-benchmark tariffs in the 2022 bilateral contracts signed between Chinese power generation companies (gencos) ...
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- Karaikal Port Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- Energy Development Corp, Philippines
- Interocean Group of Companies - India
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Baramulti Group, Indonesia
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Kideco Jaya Agung - Indonesia
- CNBM International Corporation - China
- Tata Chemicals Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- Gujarat Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Central Electricity Authority - India
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Banpu Public Company Limited - Thailand
- Bhushan Steel Limited - India
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Vedanta Resources Plc - India
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Cement Manufacturers Association - India
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- Romanian Commodities Exchange
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Link Ltd, New Zealand
- New Zealand Coal & Carbon
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- The University of Queensland
- Vizag Seaport Private Limited - India
- Indian Oil Corporation Limited
- Jindal Steel & Power Ltd - India
- Thai Mozambique Logistica
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Riau Bara Harum - Indonesia
- Therma Luzon, Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Sarangani Energy Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Marubeni Corporation - India
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Videocon Industries ltd - India
- Parliament of New Zealand
- GMR Energy Limited - India
- The Treasury - Australian Government
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kohat Cement Company Ltd. - Pakistan
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