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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, 05 July 12
BUMI ACHIEVES HIGHER SELLING PRICE IN FIRST QUARTER
COALspot.com - PT Bumi Resources Tbk (BUMI), Indonesia's largest coal producer and exporter, has successfully maintained a higher sales margin, des ...
Tuesday, 03 July 12
DRY BULK MARKET INCHED FORWARD AT THE START OF THE WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market inched forward at the beginning of the new week, prior to the US holidays regarding the celebration of the 4th of July, which is ...
Monday, 02 July 12
ORPHEUS STRENGTHENS REVENUE STREAM WITH NEW ROYALTY AGREEMENT AT THE B2 COAL PROJECT
Orpheus Energy (ASX:OEG) is pleased to advise that it has executed a life of mine Royalty Agreement with Indonesian mining contractor PT Debbia Mini ...
Monday, 02 July 12
DRY BULK DEMAND TO RISE TO 3.6 BILLION TONNES IN 2012, BUT NEW BUILDING DELIVERIES ARE
In its latest analysis on the dry bulk market fundamentals, DVB Bank said that dry bulk cargo demand is forecast to rise to approximately 3.6 billio ...
Sunday, 01 July 12
AUSTRALIAS CARBON TAX - SUNIL K KUMBHAT
COALspot.com - Climate Change
Climate change and global warming have now become buzzwords the world over. The disastrous consequences for global ...
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- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- Maheswari Brothers Coal Limited - India
- Africa Commodities Group - South Africa
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Deloitte Consulting - India
- The University of Queensland
- TNB Fuel Sdn Bhd - Malaysia
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Holcim Trading Pte Ltd - Singapore
- Tata Chemicals Ltd - India
- Aditya Birla Group - India
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- Larsen & Toubro Limited - India
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Gujarat Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- San Jose City I Power Corp, Philippines
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- Power Finance Corporation Ltd., India
- Neyveli Lignite Corporation Ltd, - India
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- Indian Energy Exchange, India
- Mercuria Energy - Indonesia
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- Petron Corporation, Philippines
- SMG Consultants - Indonesia
- Jindal Steel & Power Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Savvy Resources Ltd - HongKong
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- VISA Power Limited - India
- TeaM Sual Corporation - Philippines
- Posco Energy - South Korea
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Authority, New Zealand
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- Sakthi Sugars Limited - India
- Kaltim Prima Coal - Indonesia
- Interocean Group of Companies - India
- Planning Commission, India
- Indonesian Coal Mining Association
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- PTC India Limited - India
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Sree Jayajothi Cements Limited - India
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Commonwealth Bank - Australia
- Electricity Generating Authority of Thailand
- Cement Manufacturers Association - India
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Karbindo Abesyapradhi - Indoneisa
- McConnell Dowell - Australia
- Economic Council, Georgia
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- MS Steel International - UAE
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Altura Mining Limited, Indonesia
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