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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, 27 June 12
DIRECTORATE GENERAL OF MINERAL AND COAL OF INDONESIA INTRODUCES ON-LINE SYSTEM FOR MINING PRODUCTS EXPORT APPROVAL
COALspot.com - Directorate General of Mineral and Coal of Indonesia has released "Clear and Clean" certificate for another 33 coal miners ...
Monday, 25 June 12
RIO TINTO MAKES FIRST COAL SHIPMENT FROM MOZAMBIQUE
Rio Tinto has started exporting premium hard coking coal from its Benga Mine in the Moatize Basin in Mozambique. The first shipment of 34,000 tonnes ...
Sunday, 24 June 12
SUPRAMAX FREIGHT MARKET FIRMED UP FROM INDONESIA TO INDIA - VISTAAR
COALspot.com - This week all the segments gained and marked was firm in the Supramax and Handy size sector, where as the Cape and Panamax inde ...
Saturday, 23 June 12
COAL PRICES APPETITE FOR ROLLER-COASTER RIDES
COALspot.com - SGX AsiaClear OTC Coal Swaps have suffered something of a roller-coaster ride in terms of prices during this week. SGX’s Indone ...
Friday, 22 June 12
PRESENT SPOT WEAKNESS IS TEMPORARY, SEASONAL AND RISE AS WINTER APPROACHES - BUMI
COALspot.com - PT Bumi Resources Tbk, the world’s one of the largest coal producer and Indonesia’s largest multi grade coal miner has no ...
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- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Edison Trading Spa - Italy
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- Eastern Energy - Thailand
- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- Orica Australia Pty. Ltd.
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Grasim Industreis Ltd - India
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Orica Mining Services - Indonesia
- Uttam Galva Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Business Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Semirara Mining and Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
- Toyota Tsusho Corporation, Japan
- Madhucon Powers Ltd - India
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Australian Coal Association
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Renaissance Capital - South Africa
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- Minerals Council of Australia
- Medco Energi Mining Internasional
- Economic Council, Georgia
- PetroVietnam Power Coal Import and Supply Company
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Simpson Spence & Young - Indonesia
- Chamber of Mines of South Africa
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- San Jose City I Power Corp, Philippines
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- International Coal Ventures Pvt Ltd - India
- Anglo American - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Borneo Indobara - Indonesia
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Gujarat Mineral Development Corp Ltd - India
- Bhoruka Overseas - Indonesia
- Altura Mining Limited, Indonesia
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Ministry of Mines - Canada
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- The State Trading Corporation of India Ltd
- PTC India Limited - India
- Singapore Mercantile Exchange
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Tata Chemicals Ltd - India
- Jindal Steel & Power Ltd - India
- Carbofer General Trading SA - India
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dalmia Cement Bharat India
- Meralco Power Generation, Philippines
- Bhatia International Limited - India
- SN Aboitiz Power Inc, Philippines
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Coastal Gujarat Power Limited - India
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Bukit Makmur.PT - Indonesia
- Mintek Dendrill Indonesia
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Sakthi Sugars Limited - India
- McConnell Dowell - Australia
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
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