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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, 07 July 12
EXCESS SUPPLY & WEAK DEMAND KEEP COAL PRICES LOW
COALspot.com - SGX AsiaClear OTC Coal Swaps for August and Q4 deliveries slipped slightly this week. SGX’s Indonesian sub-bituminous coal swap ...
Saturday, 07 July 12
BALTIC INDEX UP ON STRONG CAPE, PANAMAX RATES - VISTAAR
COALspot.com - This week all the segments were firmed up with BDI up by 15.23 pct (up by 153 points) closing at 1,157 points.
The cape index also ...
Saturday, 07 July 12
DRY BULK MARKET NOT ABLE TO FIND SOLID GROUND SAY EXPERTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the second half of each, traditionally looking the most active one, especially in terms of newbuildings being delivered, it's highly unlikely ...
Thursday, 05 July 12
GOVT GETS READY FOR $1.8B SUIT - THE JAKARTA POST
The Jakarta Post, one of the leading Indonesian English new papers reported that, several ministries and the Attorney General’s Office held a ...
Thursday, 05 July 12
DRY BULK MARKET MOVES FURTHER UP THE HILL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept its growth momentum by the middle of the week, as the BDI (Baltic Dry Index) rose by an additional 40 points to 1,103 p ...
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- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- Gujarat Mineral Development Corp Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Salva Resources Pvt Ltd - India
- Carbofer General Trading SA - India
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
- Gujarat Sidhee Cement - India
- Jindal Steel & Power Ltd - India
- Bharathi Cement Corporation - India
- ASAPP Information Group - India
- Baramulti Group, Indonesia
- Timah Investasi Mineral - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Siam City Cement - Thailand
- Australian Coal Association
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- GMR Energy Limited - India
- OPG Power Generation Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Riau Bara Harum - Indonesia
- Electricity Authority, New Zealand
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Goldman Sachs - Singapore
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Sakthi Sugars Limited - India
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- Iligan Light & Power Inc, Philippines
- Deloitte Consulting - India
- Ministry of Mines - Canada
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Ceylon Electricity Board - Sri Lanka
- Leighton Contractors Pty Ltd - Australia
- Eastern Energy - Thailand
- Videocon Industries ltd - India
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Kapuas Tunggal Persada - Indonesia
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- Star Paper Mills Limited - India
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- MS Steel International - UAE
- Sical Logistics Limited - India
- Agrawal Coal Company - India
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Mercator Lines Limited - India
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Coal Blending Company Limited - Australia
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Indian Energy Exchange, India
- Barasentosa Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Australian Commodity Traders Exchange
- White Energy Company Limited
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- IEA Clean Coal Centre - UK
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- Aditya Birla Group - India
- Global Green Power PLC Corporation, Philippines
- Trasteel International SA, Italy
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Metalloyd Limited - United Kingdom
- Global Business Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Indika Energy - Indonesia
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Mercuria Energy - Indonesia
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- Oldendorff Carriers - Singapore
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
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