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Thursday, 22 December 22
COAL AND GAS PRICE CAPS MAY COMPOUND POLITICAL RISK FOR AUSTRALIAN CORPORATES - FITCH RATINGS
 Australia’s introduction of temporary price caps on domestic sales of gas and coal used for electricity generation will probably have limited direct near-term credit impact for energy-sector issuers rated by Fitch Ratings, according to the agency. However, the caps highlight that energy companies face mounting political risks that could influence investor perceptions of the sector and capex plans over the long term.
The caps have been proposed for 12 months, but even if they are extended, the direct impact should generally be limited if prices for coal and gas fall over the coming years, in line with Fitch’s base-case assumptions.
The near-term impact on Australian thermal coal miners’ financial profiles will be further mitigated, as typically around 80% of the thermal coal produced in the country is exported, and therefore is not subject to the cap.
The natural gas sector will be more exposed, as domestic demand accounts for a larger share of supply. Santos (BBB/Stable) and Woodside Energy Group (BBB+/Stable) are large suppliers of gas to the domestic market. Such sales account for more than 40% of Santos’s gas production, but we estimate that only around 15% of total production goes to the east coast markets that are exposed to the price cap.
Woodside’s domestic gas sales, including pipeline gas from the NWS Project, Pluto and Wheatstone, account for less than 6% of its gas production, with the rest exported as LNG. For both companies, most gas is already produced under long-term contracts, which will be unaffected by the caps, limiting the near-term impact. The proportion of output affected could nonetheless rise over time if the caps are extended beyond 12 months.
The prevalence of long-term supply contracts will also reduce the impact of the caps for most domestic electricity and gas retailers, including Origin Energy (BBB/Stable). If global energy prices remain high, it is possible that the caps could offer a competitive advantage to some retailers that rely more on short-term supply contracts. That said, the superior sourcing ability and flexibility in contracts should limit downside risks for large retailers. For electricity sales, the highest-cost power generator generally determines the wholesale energy market price, and we anticipate a neutral to marginally positive financial effect for entities like Origin that have flexibility in their generation portfolio.
The price caps will add to a perception that Australia’s mining sector faces mounting political risk, even though we do not believe they will have a major impact on Fitch-rated issuers in the near term. For example, the government has announced plans to implement a new system to protect sites important to Australia’s indigenous peoples. Firms in the sector, as in other parts of the world, also face political risks associated with official efforts to promote the transition to renewable energy sources.
Mounting political risk may influence investors’ perceptions of the sector, and therefore the terms on which companies are able to access finance. This could also have ramifications for M&A plans or long-term capex strategies. Nonetheless, it is likely to take time to assess the impact, which may also be offset by other market developments.
Australia’s parliament on 16 December passed legislation empowering the government to regulate gas prices, alongside an AUD1.5 billion relief package for firms and households. It remains unclear how the relief package will affect power and gas market dynamics, but we expect its impact to be temporary. The authorities plan to cap domestic gas prices at AUD12 per gigajoule. Domestic thermal coal sales prices in New South Wales and Queensland will also be capped at AUD125 per tonne.
Source: Fitch Ratings
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Friday, 02 August 24
COAL MARKET DEVELOPMENTS: FALLING PRICES AMID RECORD-HIGH OUTPUT - WORLD BANK
Coal prices inched up in May (m/m) following an 8 percent decline in 2024Q1. The Australian and South African benchmarks have plummeted more ...
Friday, 26 July 24
FUELEU MARITME IS COMING. IS YOUR CHARTERPARTY READY? - GARD
With less than six months to implementation of FuelEU Maritime in EU and EEA trades, there has been little published advice regarding how to alloca ...
Thursday, 04 July 24
INDIA'S COAL PRODUCTION RISES 14% IN JUNE - PTI
The country’s coal production rose by 14.49% to 84.63 million tonne (MT) in June. The country’s coal output was 73.92 MT in June last f ...
Tuesday, 02 July 24
NTPC CAPTIVE COAL OUTPUT GROWS 15% IN Q1; DESPATCH RISES 17%
State-owned NTPC on Monday reported a 15 per cent year-on-year increase in the production of coal from captives mines to 9.862 metric million tonne ...
Friday, 28 June 24
KOSPO INVITED BIDS FOR 400,000 MT OF MINIMUM 4000 NCV COAL FOR FIVE YEARS
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for total 400,000 MT of Low Calorific Value Coal for 5 years starting from July 2024 until ...
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- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- Edison Trading Spa - Italy
- Commonwealth Bank - Australia
- White Energy Company Limited
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- PTC India Limited - India
- Sojitz Corporation - Japan
- Wood Mackenzie - Singapore
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Mjunction Services Limited - India
- Electricity Generating Authority of Thailand
- Pendopo Energi Batubara - Indonesia
- Central Electricity Authority - India
- Kumho Petrochemical, South Korea
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- TeaM Sual Corporation - Philippines
- The University of Queensland
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Medco Energi Mining Internasional
- SMG Consultants - Indonesia
- Mintek Dendrill Indonesia
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Sakthi Sugars Limited - India
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- Attock Cement Pakistan Limited
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- Asmin Koalindo Tuhup - Indonesia
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Energy Exchange, India
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Borneo Indobara - Indonesia
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- Energy Development Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- Georgia Ports Authority, United States
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- Ceylon Electricity Board - Sri Lanka
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Therma Luzon, Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- MS Steel International - UAE
- Parliament of New Zealand
- Aboitiz Power Corporation - Philippines
- Energy Link Ltd, New Zealand
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Lanco Infratech Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Coal and Oil Company - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- Kartika Selabumi Mining - Indonesia
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Sidhee Cement - India
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- Ministry of Finance - Indonesia
- Siam City Cement PLC, Thailand
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- Vizag Seaport Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- India Bulls Power Limited - India
- VISA Power Limited - India
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- Bhushan Steel Limited - India
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
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