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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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Wednesday, 18 July 12
SHIP PRICES HAVE FALLEN RAPIDLY THIS YEAR, FAVORING INVESTORS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The price for a 5 year old Capesize dry bulk carrier of 172,000 dwt has fallen to about $33,4mil from $42.9 at the end of June 2011, while at end of ...
Saturday, 14 July 12
FREIGHT MARKET SEEMS TO BE QUITE VOLATILE - VISTAAR
COALspot.com - The market seems to be quite volatile with the trend changing almost every week. This week all the segments were down except for Pana ...
Friday, 13 July 12
TRANSCOAL MINERGY HAS RECEIVED PMA STATUS IN INDONESIA
COALspot.com - PT Transcoal Minergy (“TCM”) has received official foreign owned company status from the Capital Investment Coordinating ...
Thursday, 12 July 12
LACK OF CAPESIZE DEMAND DRAGS DRY BULK MARKET LOWER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
A lack of demand for the larger Capesize dry bulk carriers had as a result the fall of the industry’s benchmark, the BDI (Baltic Dry Index), w ...
Thursday, 12 July 12
RIO TINTO'S SENIOR MANAGEMENT CHANGES
COALspot.com - Rio Tinto is making changes to its senior management team as chief financial officer (CFO) Guy Elliott has decided to retire at the e ...
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- GMR Energy Limited - India
- MS Steel International - UAE
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- Australian Commodity Traders Exchange
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- Bhushan Steel Limited - India
- Meralco Power Generation, Philippines
- PTC India Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- OPG Power Generation Pvt Ltd - India
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- GAC Shipping (India) Pvt Ltd
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Central Java Power - Indonesia
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement PLC, Thailand
- The University of Queensland
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Transport, Egypt
- Intertek Mineral Services - Indonesia
- Ministry of Finance - Indonesia
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Wilmar Investment Holdings
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Posco Energy - South Korea
- SN Aboitiz Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- VISA Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Makarim & Taira - Indonesia
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- Uttam Galva Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Coal and Oil Company - UAE
- Tamil Nadu electricity Board
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- Parliament of New Zealand
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Pendopo Energi Batubara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Minerals Council of Australia
- Toyota Tsusho Corporation, Japan
- Singapore Mercantile Exchange
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- Holcim Trading Pte Ltd - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- CIMB Investment Bank - Malaysia
- Kaltim Prima Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Semirara Mining and Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Georgia Ports Authority, United States
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Bhoruka Overseas - Indonesia
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Carbofer General Trading SA - India
- SMG Consultants - Indonesia
- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
- The Treasury - Australian Government
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indogreen Group - Indonesia
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
- Krishnapatnam Port Company Ltd. - India
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- Goldman Sachs - Singapore
- Merrill Lynch Commodities Europe
- Mercator Lines Limited - India
- Manunggal Multi Energi - Indonesia
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