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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, 12 July 12
SOUTHGOBI RESOURCES ANNOUNCES NOTICE OF INVESTMENT DISPUTE FILED AGAINST MONGOLIAN GOVERNMENT
Press Release - SouthGobi Resources Ltd. (TSX: SGQ, HK: 1878) (“SouthGobi”) announced today that SGQ Coal Investment Pte. Ltd., a wholly ...
Wednesday, 11 July 12
HBA DROPPED SHARPLY IN JULY
COALspot.com - Indonesian HBA fell to lowest level since September 2010 in July 2012. The monthly coal reference price for coal sales this mon ...
Wednesday, 11 July 12
SUB-BIT FOB INDONESIA COAL SWAP LOST $ 1.26 PER TON
COALspot.com - Sub-Bit FOB Indonesia Coal decline for a second day yesterday, according to SGX AsiaClear OTC Coal Swaps. The prices for shipments to ...
Tuesday, 10 July 12
DRY BULK MARKET RECORDS MODEST GAINS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market inched a bit higher on Monday, with the Baltic Dry Index (BDI) ending the session up by 5 points to 1,162. Most markets were hig ...
Saturday, 07 July 12
INDONESIA-JAPAN RELATIONS TURN SOUR - THE JAKARTA POST
The Jakarta Post, the one of the leading Indonesian English new papers reported that, Bilateral relations between Indonesia and Japan have recently ...
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- Electricity Authority, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Meenaskhi Energy Private Limited - India
- Heidelberg Cement - Germany
- McConnell Dowell - Australia
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Australian Coal Association
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- Global Green Power PLC Corporation, Philippines
- The University of Queensland
- Indonesian Coal Mining Association
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Grasim Industreis Ltd - India
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Bangladesh Power Developement Board
- Energy Link Ltd, New Zealand
- The State Trading Corporation of India Ltd
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- IEA Clean Coal Centre - UK
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Rashtriya Ispat Nigam Limited - India
- London Commodity Brokers - England
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Wilmar Investment Holdings
- Binh Thuan Hamico - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Standard Chartered Bank - UAE
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Ambuja Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- Bukit Makmur.PT - Indonesia
- Eastern Coal Council - USA
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Ministry of Finance - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Kepco SPC Power Corporation, Philippines
- Indian Energy Exchange, India
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Sindya Power Generating Company Private Ltd
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
- Larsen & Toubro Limited - India
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- Electricity Generating Authority of Thailand
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Tata Chemicals Ltd - India
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- MS Steel International - UAE
- Independent Power Producers Association of India
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Power Finance Corporation Ltd., India
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Cement Manufacturers Association - India
- Semirara Mining and Power Corporation, Philippines
- Videocon Industries ltd - India
- Commonwealth Bank - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- Sojitz Corporation - Japan
- Agrawal Coal Company - India
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Sakthi Sugars Limited - India
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Borneo Indobara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Cigading International Bulk Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- Ministry of Transport, Egypt
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- Indogreen Group - Indonesia
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- Romanian Commodities Exchange
- PTC India Limited - India
- Makarim & Taira - Indonesia
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