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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, 28 July 12
CAL 2013 COAL SWAPS ARE HIGHER COMPARED TO SEPT 2012 PRICES
COALspot.com - Sub-Bit Indonesia coal swaps (FOB ) for September 2012 delivery gain 0.47 percent on Friday (27 July 2012) closing DoD but lost 0.90 ...
Friday, 27 July 12
PACIFIC MARKET REMAINED FLAT - FEARNLEYS AS
Handy
The Atlantic market continued its downward trend from last week with what appears to be a summer lull across the board. A trip from the USG t ...
Wednesday, 25 July 12
BUKIT ASAMS H1 REVENUE JUMPED BY 13 PERCENT
COALspot.com - PT Bukit Asam (Persero), Tbk., the state owned coal miner's revenue in H1 2012, has jumped 13 percent to IDR 5.79 trillion (approxim ...
Wednesday, 25 July 12
BUMI RESOURCES MINERALS SECURED PINJAM PAKAI FOR ITS ZINC AND LEAD PROJECT
COALspot.com - PT Bumi Resources Minerals Tbk. ("BRMS" or "the Company") today reported that its 80% owned subsidiary, PT Dairi ...
Tuesday, 24 July 12
SHIP OWNERS WAITING FOR SHIP PRICES TO FALL FURTHER BEFORE MOVING IN MORE AGGRESSIVELY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the summer season already well under way and many ship owners getting ready for the autumn, the sale & purchasing activity of second hand v ...
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- Bangladesh Power Developement Board
- Romanian Commodities Exchange
- Alfred C Toepfer International GmbH - Germany
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- McConnell Dowell - Australia
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- The State Trading Corporation of India Ltd
- Edison Trading Spa - Italy
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- Lanco Infratech Ltd - India
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Xindia Steels Limited - India
- Siam City Cement PLC, Thailand
- Attock Cement Pakistan Limited
- Port Waratah Coal Services - Australia
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Sinarmas Energy and Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Commonwealth Bank - Australia
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- Chamber of Mines of South Africa
- Larsen & Toubro Limited - India
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Petron Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- GMR Energy Limited - India
- Wilmar Investment Holdings
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Kepco SPC Power Corporation, Philippines
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Australian Coal Association
- Coal and Oil Company - UAE
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Independent Power Producers Association of India
- CNBM International Corporation - China
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Bharathi Cement Corporation - India
- Bhushan Steel Limited - India
- India Bulls Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- Electricity Authority, New Zealand
- Kartika Selabumi Mining - Indonesia
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- Videocon Industries ltd - India
- Indika Energy - Indonesia
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- Neyveli Lignite Corporation Ltd, - India
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- Eastern Energy - Thailand
- Cigading International Bulk Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- Central Electricity Authority - India
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- Posco Energy - South Korea
- Intertek Mineral Services - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- PTC India Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Deloitte Consulting - India
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