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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, 20 January 22
CHINESE COAL JUMPS OVER 6% ON PRE-HOLIDAY SUPPLY WORRY - REUTERS
China’s thermal coal futures soared more than 6% on Wednesday, hitting a level last seen in late November as investors grew concerned over ti ...
Thursday, 20 January 22
VIETNAM: COAL SECTOR SEES POSITIVE PROSPECT IN 2022 - VNA
With many signs of rising demand for coal in various economic sectors in 2022, the Vietnam National Coal – Mineral Industries Group (Vinacomi ...
Wednesday, 19 January 22
MARKET INSIGHT - INTERMODAL
Since the beginning of the year, we have been witnessing the BDI correcting downwards with sizable drops across all segments. Latest similar levels ...
Sunday, 09 January 22
INDONESIA MINISTER SAYS 'EMERGENCY OVER' ON COAL SUPPLY CRUNCH - REUTERS
Indonesia’s power emergency which has triggered a coal export ban is over but the government will still continue to discuss policies in this ...
Wednesday, 05 January 22
CHINA COAL FUTURES SURGE ON SUPPLY WORRIES AMID INDONESIA EXPORT BAN - REUTERS
China’s thermal coal futures surged by as much as 7.8per cent to kick off 2022 on concerns of supply disruptions after Indonesia, its biggest ...
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- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- Sojitz Corporation - Japan
- PTC India Limited - India
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Jindal Steel & Power Ltd - India
- The University of Queensland
- Anglo American - United Kingdom
- VISA Power Limited - India
- London Commodity Brokers - England
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Merrill Lynch Commodities Europe
- Sical Logistics Limited - India
- Tamil Nadu electricity Board
- Petrochimia International Co. Ltd.- Taiwan
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- Antam Resourcindo - Indonesia
- Oldendorff Carriers - Singapore
- Aditya Birla Group - India
- Asmin Koalindo Tuhup - Indonesia
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Parliament of New Zealand
- Georgia Ports Authority, United States
- Global Green Power PLC Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Australian Commodity Traders Exchange
- Larsen & Toubro Limited - India
- Eastern Coal Council - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bangladesh Power Developement Board
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- The Treasury - Australian Government
- Gujarat Mineral Development Corp Ltd - India
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Star Paper Mills Limited - India
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- White Energy Company Limited
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Medco Energi Mining Internasional
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Goldman Sachs - Singapore
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Energy Exchange, India
- GMR Energy Limited - India
- Riau Bara Harum - Indonesia
- Power Finance Corporation Ltd., India
- Maheswari Brothers Coal Limited - India
- CNBM International Corporation - China
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Attock Cement Pakistan Limited
- Australian Coal Association
- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Sree Jayajothi Cements Limited - India
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- Banpu Public Company Limited - Thailand
- Chettinad Cement Corporation Ltd - India
- Meralco Power Generation, Philippines
- Globalindo Alam Lestari - Indonesia
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- Commonwealth Bank - Australia
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- India Bulls Power Limited - India
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- PNOC Exploration Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
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