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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, 08 May 12
DRY BULK MARKET LOOKING FOR NEW DIRECTION THIS WEEK - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
With the BDI (Baltic Dry Index) the main benchmark of the dry bulk shipping industry not traded at the start of this week, traders, charterers and s ...
Monday, 07 May 12
INDONESIAN HBA FALL AGAIN IN MAY 2012
COALspot.com - Indonesian HBA fall again to lowest level since January 2011 in May 2012. The monthly coal reference price for coal sales in Ma ...
Sunday, 06 May 12
INDONESIAN SUB-BITUMINOUS COAL & CFR SOUTH CHINA SWAPS SLIGHTLY DROP THIS WEEK
COALspot.com - Indonesian sub-bituminous coal swaps and CFR South China coal contracts for June deliveries slightly dropped this week.
According ...
Sunday, 06 May 12
S7 & S8 ROUTES LIKELY TO BE FIRM NEXT WEEK VISTAAR SINGAPORE
COALspot.com - The BDI remained flat this week and was up just by 1 point closing at 1,157 points.
The cape size index was up by 5.14 pct closing ...
Sunday, 06 May 12
EXPORT DUTY ON MINERAL FINALLY TO BECOME EFFECTIVE NEXT WEEK
COALspot.com - Mineral ore exporters of Indonesia ( only IUP holders) are required to obtain recommendation letter from the energy and mineral ...
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- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- Bukit Baiduri Energy - Indonesia
- Indika Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Agrawal Coal Company - India
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bulk Trading Sa - Switzerland
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Savvy Resources Ltd - HongKong
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- VISA Power Limited - India
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- Kumho Petrochemical, South Korea
- Eastern Coal Council - USA
- Petron Corporation, Philippines
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Makarim & Taira - Indonesia
- Larsen & Toubro Limited - India
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Therma Luzon, Inc, Philippines
- Coastal Gujarat Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- LBH Netherlands Bv - Netherlands
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- Australian Coal Association
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- Trasteel International SA, Italy
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- Coal and Oil Company - UAE
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Orica Australia Pty. Ltd.
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Coalindo Energy - Indonesia
- Formosa Plastics Group - Taiwan
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- The State Trading Corporation of India Ltd
- Renaissance Capital - South Africa
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- Simpson Spence & Young - Indonesia
- Kobexindo Tractors - Indoneisa
- CIMB Investment Bank - Malaysia
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Binh Thuan Hamico - Vietnam
- Siam City Cement - Thailand
- GMR Energy Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Bhatia International Limited - India
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Oldendorff Carriers - Singapore
- Kaltim Prima Coal - Indonesia
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Mercator Lines Limited - India
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- Thai Mozambique Logistica
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- Bhushan Steel Limited - India
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Indonesian Coal Mining Association
- Videocon Industries ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
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