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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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Monday, 10 September 12
TNPL, AN INDIAN PAPER MAKER IS SEEKING FOR 300K MT OF IMPORTED NON-COKING COAL
COALspot.com - Tamil Nadu Newsprint & Papers Ltd. , an Indian paper maker, is seeking 300,000 metric tons ± 5% (In 6 Shipments about 50,0 ...
Monday, 10 September 12
DRY BULK MARKET SLOWLY BUT SURELY REACHING CRITICAL STATUS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The radical consequences of the shifts in dry bulk demand and prices, especially for the most sought after commodity, concerning the industry, i.e. ...
Monday, 10 September 12
ORPHEUS ENERGY SECURES INDONESIAN COAL TRADING LICENSE
COALspot.com - Indonesian coal producer, Orpheus Energy (ASX:OEG) has announced today that the Indonesian Ministry of Energy and Mineral Resources h ...
Monday, 10 September 12
A SNAPSHOT ON THE ECONOMIC AND SHIPPING ENVIRONMENT - GOLDEN DESTINY / HELLENIC SHIPPING
The European Central Bank left its interest rate unchanged at 0.75% focusing on pushing down borrowing costs in troubled economies, Spain and Italy. ...
Sunday, 09 September 12
H213 SUB-BIT FOB INDONESIA COAL SWAPS ARE TRADING HIGHER
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for October 2012 delivery lost 0.14 percent W-O-W on 7 September 2012, Friday closing but gained ...
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- TeaM Sual Corporation - Philippines
- Planning Commission, India
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- Africa Commodities Group - South Africa
- VISA Power Limited - India
- Australian Coal Association
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- Gujarat Sidhee Cement - India
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Kobexindo Tractors - Indoneisa
- New Zealand Coal & Carbon
- Iligan Light & Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Bangladesh Power Developement Board
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Economic Council, Georgia
- ICICI Bank Limited - India
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Edison Trading Spa - Italy
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Directorate General of MIneral and Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement - Thailand
- Agrawal Coal Company - India
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Ind-Barath Power Infra Limited - India
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- Aboitiz Power Corporation - Philippines
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Trasteel International SA, Italy
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Aditya Birla Group - India
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- McConnell Dowell - Australia
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Mjunction Services Limited - India
- Sree Jayajothi Cements Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Transport, Egypt
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- Mercator Lines Limited - India
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- Vizag Seaport Private Limited - India
- ASAPP Information Group - India
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- White Energy Company Limited
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Oldendorff Carriers - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- PNOC Exploration Corporation - Philippines
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