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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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Thursday, 20 September 12
DRY BULK INCHES FORWARD AFTER WEEKS OF BELOW PAR PERFORMANCE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has started to revive from its ashed, as the past couple of days, traders have reported an increased activity from China, result ...
Wednesday, 19 September 12
CHURCHILL STRENGTHENS LITIGATION TEAM WITH APPOINTMENT OF NICHOLAS SMITH AS MANAGING DIRECTOR
COALspot.com - Churchill Mining PLC (AIM: CHL) has announced that, Mr Nicholas Smith has joined the board of the Company and has been appointed as t ...
Wednesday, 19 September 12
DRY BULK TERMINALS SINGAPORE
Press Release - Dry bulk terminals are used all around the world to handle large quantities of bulk materials, like minerals, grains, etc. In today& ...
Tuesday, 18 September 12
JORC CODE REVISION - EXPOSURE DRAFT RELEASED FOR COMMENT
COALspot.com - The Australasian Joint Ore Reserves Committee (JORC) has today released for public comment the exposure draft of the JORC Code (2012) ...
Monday, 17 September 12
YEAR TO DATE, BUMA PRODUCED 231.1 MILLION BCM OF OVERBURDEN
COALspot.com - PT. Delta Dunia Makmur Tbk has removed 31.5 million bcm (+6.0 percent YoY) overburden in August 2012 totaled 31.5 million bcm ( ...
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- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Goldman Sachs - Singapore
- Planning Commission, India
- Latin American Coal - Colombia
- European Bulk Services B.V. - Netherlands
- Kumho Petrochemical, South Korea
- Kartika Selabumi Mining - Indonesia
- Parliament of New Zealand
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- White Energy Company Limited
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Maheswari Brothers Coal Limited - India
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- The Treasury - Australian Government
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Independent Power Producers Association of India
- SMG Consultants - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Indian Energy Exchange, India
- The University of Queensland
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- MS Steel International - UAE
- Mercuria Energy - Indonesia
- Carbofer General Trading SA - India
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- IEA Clean Coal Centre - UK
- Kobexindo Tractors - Indoneisa
- Eastern Coal Council - USA
- ASAPP Information Group - India
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Trasteel International SA, Italy
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- Agrawal Coal Company - India
- Bukit Makmur.PT - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- International Coal Ventures Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- Ministry of Finance - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Bangladesh Power Developement Board
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- Indonesian Coal Mining Association
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Billiton Holdings Pty Ltd - Australia
- Australian Coal Association
- Romanian Commodities Exchange
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- PowerSource Philippines DevCo
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Commonwealth Bank - Australia
- Binh Thuan Hamico - Vietnam
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Thai Mozambique Logistica
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- GVK Power & Infra Limited - India
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- Rio Tinto Coal - Australia
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Mintek Dendrill Indonesia
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- Marubeni Corporation - India
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
- Therma Luzon, Inc, Philippines
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Star Paper Mills Limited - India
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Krishnapatnam Port Company Ltd. - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cement Manufacturers Association - India
- New Zealand Coal & Carbon
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Dalmia Cement Bharat India
- Baramulti Group, Indonesia
- Globalindo Alam Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Videocon Industries ltd - India
- Aboitiz Power Corporation - Philippines
- Central Java Power - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Gujarat Sidhee Cement - India
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Semirara Mining and Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
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