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Thursday, 23 September 21
RECORD-HIGH GAS PRICES AFFECT MANY EUROPEAN CORPORATE SECTORS - FITCH RATINGS
 Record-high natural gas prices are putting pressure on supply chains of many European corporate sectors, including non-integrated energy suppliers, fertiliser producers and consumer goods companies, Fitch Ratings says. Smaller companies in these industries are under the most pressure, while larger and more diversified issuers rated by Fitch are better positioned to mitigate the impact. Gas prices could remain high until the end of the winter heating season, given low levels of natural gas in European storage facilities. However, we expect prices to moderate once seasonal demand reduces.
High gas prices and working capital fluctuations have already caused several non-integrated UK gas suppliers (not rated by Fitch) to ask for state support in fulfilling their supply obligations to customers.
The Spanish government has introduced a levy on low-carbon power producers to support smaller suppliers.
Supply is typically a small part of larger Fitch-rated integrated utilities in Europe, which are able to pass costs on to most customer groups, or hedge. Although we expect higher gas prices to increase regulatory risks, the rated utilities’ diversification by jurisdiction and business line, including electricity production and distribution networks, cushions the impact. The unfolding situation in the European gas market may further accelerate the energy transition in the utility sector towards renewables.
Fertiliser producers have been severely affected by rising gas prices. Gas is a key input in ammonia production, which is further used in urea and DAP production. Several ammonia plants in Europe have cut their output or have temporarily shut down operations. Larger Fitch-rated fertiliser producers with a global presence are able to continue production in other regions or source ammonia from third parties, limiting the impact. Producers may also seek to increase fertiliser prices to pass costs onto consumers.
Agriculture and food producers are affected by challenges in the fertiliser sector. Agribusinesses may face shortages in fertiliser supplies and increased prices, most likely increasing their costs in the next season’s harvest. However, meat processors and carbonated drinks manufacturers, particularly in the UK, already face disruptions due to CO2 shortages, which is a by-product of ammonia manufacturing and is used in meat and fizzy drinks production. Geographically diversified food and beverages producers are better positioned to mitigate such shortages.
The record-high prices in Europe are driven by increased demand (due to the wider economic recovery and weather-related factors), competition with Asia for LNG, and a limited supply response from Gazprom, Europe’s largest supplier, providing about a third of Europe’s gas. Prices have also risen due to market fears of a gas deficit during the winter heating season due to low European storage utilisation compared to previous years.
Utilisation at Gazprom-linked storage facilities (around 10% of European capacity) is particularly low, affecting average utilisation rates in Austria, Germany and the Netherlands. Furthermore, unlike September in recent years, Gazprom has not offered any meaningful volumes for delivery this or next year via its electronic sales platform (a sales channel for short-term gas deliveries, used in addition to sales under long-term contracts). Gazprom’s total exports should increase in 2021 but this is unlikely to be sufficient to re-balance the market. Starting the new Nord Stream 2 pipeline, which is facing difficulties in obtaining necessary approvals from regulators in Europe, may affect the availability of additional gas volumes.
We have recently increased our short-term gas price assumptions. However, we expect a normalisation of demand and potential additional supplies to result in a return to mid-cycle pricing from 2023.
Source: Fitch Ratings
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Wednesday, 28 April 21
MARKET INSIGHT - INTERMODAL
Despite the current challenges as a result of the global pandemic, 2021 is turning out to be a landmark year for the iron ore market with spot pric ...
Monday, 26 April 21
CHINA TO FURTHER CUT COAL USE IN 2021 - XINHUA
China aims to reduce the share of coal in its energy mix to less than 56% this year, according to a guideline released by the National Energy Admin ...
Wednesday, 21 April 21
COAL FINANCING COSTS HAVE SURGED IN PAST 10 YEARS - UNIVERSITY OF OXFORD - THE GUARDIAN
Coal financing costs have surged over the last decade as investors demand returns four times as high as the payoff required from renewable energy p ...
Tuesday, 20 April 21
US DOLLAR LIBOR TRANSITION IN ASSET FINANCE - WHERE ARE WE NOW? - WATSON FARLEY & WILLIAMS
Since our last article, there has been a raft of regulatory and market body announcements relating to the transition away from LIBOR and the follow ...
Sunday, 18 April 21
INDONESIA LIKELY TO WITNESS 119 OIL AND GAS PROJECTS STARTS ACROSS VALUE CHAIN BY 2025, SAYS GLOBALDATA
Indonesia is expected to witness 119 oil and gas projects commencing their operations across value chain during 2021-2025, accounting for 6% of the ...
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- Kalimantan Lumbung Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- Minerals Council of Australia
- Semirara Mining Corp, Philippines
- Bhushan Steel Limited - India
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Planning Commission, India
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- Meralco Power Generation, Philippines
- CNBM International Corporation - China
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Dalmia Cement Bharat India
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Energy Development Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- GMR Energy Limited - India
- Economic Council, Georgia
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- San Jose City I Power Corp, Philippines
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bangladesh Power Developement Board
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- Altura Mining Limited, Indonesia
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Independent Power Producers Association of India
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Merrill Lynch Commodities Europe
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Kumho Petrochemical, South Korea
- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- India Bulls Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Mjunction Services Limited - India
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- Coal and Oil Company - UAE
- Cement Manufacturers Association - India
- Directorate General of MIneral and Coal - Indonesia
- Agrawal Coal Company - India
- Bukit Baiduri Energy - Indonesia
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- Africa Commodities Group - South Africa
- Indian Energy Exchange, India
- Bukit Asam (Persero) Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- Simpson Spence & Young - Indonesia
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- Trasteel International SA, Italy
- Deloitte Consulting - India
- Leighton Contractors Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Medco Energi Mining Internasional
- Bahari Cakrawala Sebuku - Indonesia
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Heidelberg Cement - Germany
- Romanian Commodities Exchange
- Commonwealth Bank - Australia
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Latin American Coal - Colombia
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- Uttam Galva Steels Limited - India
- Wilmar Investment Holdings
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Thai Mozambique Logistica
- Australian Coal Association
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
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