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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, 15 May 12
POTENTIAL BOOM OF CHINAS COAL IMPORTS COULD PROVIDE FURTHER SUPPORT TO DRY BULK MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has been moving sideways during the past week with the industry’s benchmark, the Baltic Dry Index (BDI) losing 0.53% on th ...
Saturday, 12 May 12
THE SHIPPING MARKET IS UNLIKELY TO SEE A REBOUND ANYTIME SOON - VISTAAR SINGAPORE
COALspot.com - The BDI softened this week and it was down by 1.64 pct closing at 1,138 points.
The cape index was up by 2.41 pct closing at 1,61 ...
Friday, 11 May 12
POLITICAL CHANGES COULD LEAD TO TEMPORARY HALT IN SHIPPING INVESTMENTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The potential of changes of political leadership in many of the world’s leading economies could very well lead to significant shifts in the di ...
Thursday, 10 May 12
DRY BULK ERRATIC ON LACK OF DIRECTION - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market has kept up its erratic behavior as it went down again during yesterday’s session, on a lack of direct guidance in terms o ...
Wednesday, 09 May 12
COAL INDIA SIGNS FSAS WITH 13 POWER UNITS SO FAR - PTI
Press Trust of India has reported that, coal India has so far entered into fuel supply pacts with 13 power units, including Reliance Power's Rosa P ...
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- Bhatia International Limited - India
- Sinarmas Energy and Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Dalmia Cement Bharat India
- Karaikal Port Pvt Ltd - India
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- Riau Bara Harum - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Aboitiz Power Corporation - Philippines
- Madhucon Powers Ltd - India
- Wilmar Investment Holdings
- Indika Energy - Indonesia
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- ASAPP Information Group - India
- Sical Logistics Limited - India
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Xindia Steels Limited - India
- Planning Commission, India
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- Eastern Coal Council - USA
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- Global Green Power PLC Corporation, Philippines
- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- Borneo Indobara - Indonesia
- Banpu Public Company Limited - Thailand
- Gujarat Sidhee Cement - India
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mjunction Services Limited - India
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Lanco Infratech Ltd - India
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- Mintek Dendrill Indonesia
- White Energy Company Limited
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- SN Aboitiz Power Inc, Philippines
- Indian Oil Corporation Limited
- Port Waratah Coal Services - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Neyveli Lignite Corporation Ltd, - India
- India Bulls Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Coal and Oil Company - UAE
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- Asmin Koalindo Tuhup - Indonesia
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- Interocean Group of Companies - India
- VISA Power Limited - India
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- Standard Chartered Bank - UAE
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Deloitte Consulting - India
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Uttam Galva Steels Limited - India
- PowerSource Philippines DevCo
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- Grasim Industreis Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Timah Investasi Mineral - Indoneisa
- Attock Cement Pakistan Limited
- PNOC Exploration Corporation - Philippines
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Renaissance Capital - South Africa
- Savvy Resources Ltd - HongKong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- CNBM International Corporation - China
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- Ind-Barath Power Infra Limited - India
- Independent Power Producers Association of India
- Toyota Tsusho Corporation, Japan
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Intertek Mineral Services - Indonesia
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- Bhushan Steel Limited - India
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
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