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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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Sunday, 29 April 12
THE FREIGHT MARKET EXPECTED TO BE STEADY NEXT WEEK - VISTAAR
COALspot.com - The BDI continued to go up with the support of Panamax/Supramax and was up by 8.34 pct closing at 1,156 points.
The cape index was ...
Sunday, 29 April 12
INDONESIAN SUB-BITUMINOUS COAL SWAPS FOR MAY 2012 DELIVERY WAS STABLE THIS WEEK
COALspot.com - Indonesian sub-bituminous coal swaps for May deliveries stable this week, according to DSP of SGX AsiaClear OTC Coal Swaps. In the me ...
Friday, 27 April 12
BUKIT ASAMS NET INCOME UP 14% IN 1Q 2012 (UNAUDITED)
Press Release - PT Bukit Asam (Persero) Tbk, announced the Consolidated Financial Statements and Subsidiaries per 31 March 2012 (Unaudited).
Reve ...
Thursday, 26 April 12
AUSTRALIAS COKAL EXPANDS MET COAL POTENTIAL INTO WEST KALIMANTAN
COALspot.com - Global metallurgical coal group Cokal Limited (Cokal) (ASX:CKA) announced today it has completed the acquisition of 75.2% of PT Silan ...
Thursday, 26 April 12
BUKIT ASAMS 1Q OPERATING PROFIT MARGIN HAS INCREASED BY 6% TO RP. 1 TRILLION
COALspot.com - PT. Bukit Asam (Persero), the Indonesia’s state owned coal miner's 1Q, 2012 revenue has increased by 31% to Rp. 3.02 trillion ...
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- Toyota Tsusho Corporation, Japan
- Kobexindo Tractors - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- Latin American Coal - Colombia
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Renaissance Capital - South Africa
- McConnell Dowell - Australia
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- Xindia Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- Independent Power Producers Association of India
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Madhucon Powers Ltd - India
- Interocean Group of Companies - India
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- White Energy Company Limited
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Dalmia Cement Bharat India
- Vizag Seaport Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Chettinad Cement Corporation Ltd - India
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- Barasentosa Lestari - Indonesia
- London Commodity Brokers - England
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- ICICI Bank Limited - India
- International Coal Ventures Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Marubeni Corporation - India
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- Meenaskhi Energy Private Limited - India
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- India Bulls Power Limited - India
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- Parliament of New Zealand
- Vedanta Resources Plc - India
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- Ambuja Cements Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Mercator Lines Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Uttam Galva Steels Limited - India
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Minerals Council of Australia
- Larsen & Toubro Limited - India
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- MS Steel International - UAE
- Sree Jayajothi Cements Limited - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Economic Council, Georgia
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- Rio Tinto Coal - Australia
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Carbofer General Trading SA - India
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- GVK Power & Infra Limited - India
- Orica Mining Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- Orica Australia Pty. Ltd.
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Aditya Birla Group - India
- Simpson Spence & Young - Indonesia
- Posco Energy - South Korea
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- GMR Energy Limited - India
- Sarangani Energy Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- OPG Power Generation Pvt Ltd - India
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
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