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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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Saturday, 25 August 12
FREIGHT RATES ARE EXPECTED TO BE STEADY NEXT WEEK - VISTAAR
COALspot.com - This week the indices showed some signs of improvement will all the segments moving up except for the handy size.
The BDI was marg ...
Saturday, 25 August 12
INDONESIAN COAL SWAP REMAINS STABLE AT LOW LEVEL
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for October 2012 delivery gain 0.804 percent W-o-W on Friday (24 August 2012) closing but lost 0. ...
Thursday, 23 August 12
INDONESIA-INDIA, LARGE ECO SUPRA FIXED AT USD 6K FOR DELIVERY SOUTH CHINA - FEARNLEYS AS
Handy
The market continued the same trend as last week, low activity and holidays in some countries.
Rate wise unchanged, with US Gulf/Continent ...
Thursday, 23 August 12
EGCO GROUP EXPANDS TOWARDS INTEGRATED ENERGY BUSINESS WITH INVESTMENT IN INDONESIAS COAL MINE
Electricity Generating Public Company Limited or EGCO Group, the Thailand’s first Independent Power Producer has continually invaded foreign m ...
Thursday, 23 August 12
EGCO GROUP ANNOUNCES 2 BILLION BAHT PROFITS IN Q2/2012
Successfully Establishes Integrated Energy Business and Strengthen Investments in ASEAN
Mr. Sahust Pratuknukul, President of Electri ...
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- Kartika Selabumi Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Economic Council, Georgia
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Renaissance Capital - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Eastern Energy - Thailand
- Eastern Coal Council - USA
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Bharathi Cement Corporation - India
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- VISA Power Limited - India
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- CIMB Investment Bank - Malaysia
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Agrawal Coal Company - India
- Vizag Seaport Private Limited - India
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- GAC Shipping (India) Pvt Ltd
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sojitz Corporation - Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- Grasim Industreis Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- Kepco SPC Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- Thiess Contractors Indonesia
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- Vedanta Resources Plc - India
- Sarangani Energy Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- Mintek Dendrill Indonesia
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Energy Link Ltd, New Zealand
- Parry Sugars Refinery, India
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Posco Energy - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Minerals Council of Australia
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Metalloyd Limited - United Kingdom
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Australian Coal Association
- Ambuja Cements Ltd - India
- Sakthi Sugars Limited - India
- Xindia Steels Limited - India
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- IHS Mccloskey Coal Group - USA
- Kobexindo Tractors - Indoneisa
- Indian Oil Corporation Limited
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- CNBM International Corporation - China
- TeaM Sual Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- Trasteel International SA, Italy
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Jorong Barutama Greston.PT - Indonesia
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- The University of Queensland
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- Kumho Petrochemical, South Korea
- Billiton Holdings Pty Ltd - Australia
- PTC India Limited - India
- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
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