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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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Tuesday, 12 June 12
ITACHA RESOURCES BUYS SARANA MARINE - INSIDER STORIES
Insider Stories reported that, coal mining company PT Itacha Resources, a joint venture between Anthoni Salim and Glenn Yusuf, announced that Itacha ...
Monday, 11 June 12
BAHANA FORECASTS THE COAL PRICES WILL FALL FURTHER
COALspot.com - Growing US coal supplies + low shipping costs = Asia as target.
According to Irwan Budiarto analyst at Bahana Securities, US ...
Monday, 11 June 12
ASIAN COAL TRADING COMMUNITY EMBRACES API 5 AND API 8
Press Release - The Asian coal trading community is embracing the API 5 and API 8 indexes for its swap contracts.
The API 5 index represents 5,50 ...
Sunday, 10 June 12
FREIGHT MARKET EXPECTED TO REMAIN WEAK FOR NEXT FEW WEEKS - VISTAAR
COALspot.com - The BDI continued to fall this week and down by 2.99 pct closing at 877 points.
The Cape index also was down by 5.78 pct closing a ...
Friday, 08 June 12
ESSAR ENERGY RECEIVES FINAL APPROVAL FOR INDONESIAN COAL BLOCK
COALspot.com - Essar Energy plc, the India-focused integrated energy company, today announced that it has received final ‘Pinjam Pakai’ ...
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- Ministry of Transport, Egypt
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- Savvy Resources Ltd - HongKong
- Australian Coal Association
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- India Bulls Power Limited - India
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Posco Energy - South Korea
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Georgia Ports Authority, United States
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- Karbindo Abesyapradhi - Indoneisa
- OPG Power Generation Pvt Ltd - India
- White Energy Company Limited
- Marubeni Corporation - India
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- SMG Consultants - Indonesia
- IEA Clean Coal Centre - UK
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- Sojitz Corporation - Japan
- Grasim Industreis Ltd - India
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indian Energy Exchange, India
- Gujarat Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- Makarim & Taira - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bayan Resources Tbk. - Indonesia
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Pendopo Energi Batubara - Indonesia
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- PTC India Limited - India
- Star Paper Mills Limited - India
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- Antam Resourcindo - Indonesia
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- Eastern Coal Council - USA
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- Kumho Petrochemical, South Korea
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Uttam Galva Steels Limited - India
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- Ceylon Electricity Board - Sri Lanka
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- Globalindo Alam Lestari - Indonesia
- Wood Mackenzie - Singapore
- Kideco Jaya Agung - Indonesia
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Xindia Steels Limited - India
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Wilmar Investment Holdings
- Sinarmas Energy and Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- The University of Queensland
- Ministry of Finance - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indogreen Group - Indonesia
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- Oldendorff Carriers - Singapore
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
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