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Wednesday, 02 May 12
CHINA BLACKOUTS HIGHLIGHT PRICING POLICY WEAKNESS - FITCH
 Fitch reported that, the likelihood of further electricity blackouts in China this summer underlines Fitch's view of the basic problem facing thermal electricity generators - that the tariff framework is not sustainable in the long term.
The problem centres on China's thermal or coal-fired plants, which in 2011 represented 72.5% of total electricity production of 4,692.8TWh, and are likely to remain the backbone of electricity generation for the foreseeable future. The problem is not with China's national electricity grid, which is well developed, but rather with the non-viability of the pricing mechanism for the coal-fired generators.
The Chinese thermal generators are unwilling to produce excess electricity in peak periods when their marginal generation costs are above the tariffs the government will allow them to charge the grid companies. Tariff adjustments have not been timely or sufficient despite the rising cost of coal, as the government has prioritised the management of inflation - thereby constraining profitability. The weak economics have also discouraged private-sector investment, while the state-linked thermal generators - Huaneng International ('BB+'/Stable), Datang International ('BB'/Stable), China Power International Development ('BB'/Stable), and Huadian International ('BB-'/Stable) - are now struggling with substantially weakened balance sheets.
Coal input prices for the thermal generators have increased dramatically over the past three years to end-2011, rising by an average of 16% pa. Meanwhile, the Chinese government has only allowed nationwide electricity tariffs to rise once in the last two years, by around 5% for non-residential customers in December 2011. Some tariff increases also occurred in selective provinces in April 2011, but the impact on generators' profitability was limited.
A 5% cap on annual coal price increases was introduced along with the December 2011 electricity tariff revision, but this applied only to contracted coal prices. These capped prices only represent around 30%-40% of the total needs of most thermal generators. Accordingly, large amounts of coal have to be bought on the spot market at substantially higher prices, making excess electricity production an uneconomic proposition. The substantial premium - typically 30% - on spot market prices against the capped contract coal price results in coal producers seeking ways to reduce their contracted sales in favour of spot sales, which is steadily eroding any benefit from the coal price caps.
A longer-term problem, and a potential cause of an eventual structural shortfall in generation capacity, is that limited profit - or losses - from thermal operations have since 2008 led to new capex in the industry being diverted away from thermal and into wind, hydro and vertical integration via coal mine acquisitions. A National Energy Administration (NEA) report dated 30 January 30 2012 confirmed that China's investment in thermal power assets fell again in 2011, by 26%, to CNY105.4bn. This trend, which cannot be reversed quickly due to the typical minimum two-year lead time to build new thermal capacity, is a serious concern given China's continued dependence on coal for its power generation.
The Chinese thermal generators are likely to face sustained weak operating cash flows and negative free cash generation under this heavily regulated environment, a situation which Fitch believes to be unsustainable in light of the continued growth in the Chinese economy. The agency believes that China is looking to introduce price reforms across the energy industries, but achieving a truly cost-reflective tariff regime is likely to take several more years, and will require a favourable inflationary climate. In the meantime, demand will continue to outstrip supply, even if - theoretically - the capacity exists within the generation system.
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Sunday, 23 September 12
AN ANOTHER UNSTABLE WEEK FOR INDONESIAN COAL SWAPS
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for November 2012 delivery lost 1.10 percent and 0.916 percent WOW and DOD respectively ...
Sunday, 23 September 12
INDIA IMPORTED 11.40 PERCENT MORE INDONESIAN COAL IN AUGUST
COALspot.com: Indonesia, the world largest multi grade coal exporter, shipped 26,451,565* tons of coal in August 2012, compared to 27.88* mill ...
Saturday, 22 September 12
SOFT BUNKER PRICES KEEP INDONESIA TO INDIA FREIGHTS STABLE - VISTAAR
COALspot.com - The freight market overall remained buoyant with all indices up except for Panamax index. The main effect seems to be increased shipm ...
Friday, 21 September 12
SHIP BREAKING ACTIVITY REACHES NEW RECORDS, AS ALREADY 2012 LEVELS HAVE SURPASSED THE WHOLE OF 2011 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The vast oversupply of vessels, most notably in the dry bulk shipping sector, has forced ship owners to intensify their efforts towards recycling th ...
Thursday, 20 September 12
SUPRAMAX : INDO-INDIA ROUNDS WERE AROUND USD 12K - FEARNLEYS
Handy
Not a bad week for Supramax tonnage, if we compare Supramax developments to the bigger size tonnage. The rates have basically remained unchan ...
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- Indonesian Coal Mining Association
- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- Cement Manufacturers Association - India
- Savvy Resources Ltd - HongKong
- Rio Tinto Coal - Australia
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- Ambuja Cements Ltd - India
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Semirara Mining Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- Attock Cement Pakistan Limited
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Baramulti Group, Indonesia
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- The Treasury - Australian Government
- London Commodity Brokers - England
- Tamil Nadu electricity Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Formosa Plastics Group - Taiwan
- CIMB Investment Bank - Malaysia
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Independent Power Producers Association of India
- Kapuas Tunggal Persada - Indonesia
- India Bulls Power Limited - India
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Anglo American - United Kingdom
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Edison Trading Spa - Italy
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Star Paper Mills Limited - India
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coalindo Energy - Indonesia
- Trasteel International SA, Italy
- Medco Energi Mining Internasional
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Billiton Holdings Pty Ltd - Australia
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- The University of Queensland
- Interocean Group of Companies - India
- Marubeni Corporation - India
- Coastal Gujarat Power Limited - India
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Indika Energy - Indonesia
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Latin American Coal - Colombia
- TeaM Sual Corporation - Philippines
- Deloitte Consulting - India
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- The State Trading Corporation of India Ltd
- Vizag Seaport Private Limited - India
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mintek Dendrill Indonesia
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- CNBM International Corporation - China
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Uttam Galva Steels Limited - India
- GN Power Mariveles Coal Plant, Philippines
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