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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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Sunday, 16 April 23
CHINA JUGGLES FOUR MAJOR ECONOMIC CHANGES IN 2023 - WOOD MACKENZIE
Change is afoot in China. Economic growth is slowing, while rising political tensions between China and the US, coupled with global supply chain re ...
Sunday, 16 April 23
CHINA'S MARCH COAL IMPORTS JUMP TO 3-YEAR HIGH - REUTERS
China’s coal imports surged in March to their highest in any month over the past three years as utilities increased purchases on expectations ...
Sunday, 16 April 23
OPEC KEEPS WORLD OIL DEMAND GROWTH OUTLOOK UNCHANGED
The OPEC Reference Basket (ORB) declined in March by $3.43, or 4.2%, m-o-m to average $78.45/b. The ICE Brent first-month contract fell by $4.33, o ...
Sunday, 16 April 23
CHEAPER SPOT LNG PRICES TEMPT SOME ASIAN BUYERS AMID SUPPLY GAINS - REUTERS
Cheaper spot prices for liquefied natural gas (LNG) are luring price-sensitive buyers back in Asia, with China and India recording rising imports i ...
Tuesday, 11 April 23
COAL USE CLIMBS WORLDWIDE DESPITE PROMISES TO SLASH IT - AAP
The burning of coal for electricity, cement, steel and other uses went up in 2022 despite global promises to phase down the fuel that is the bigges ...
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- Anglo American - United Kingdom
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Romanian Commodities Exchange
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- Marubeni Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Economic Council, Georgia
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- MS Steel International - UAE
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- Global Business Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Bhushan Steel Limited - India
- South Luzon Thermal Energy Corporation
- Eastern Energy - Thailand
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Latin American Coal - Colombia
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Parliament of New Zealand
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- Maheswari Brothers Coal Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Kapuas Tunggal Persada - Indonesia
- Indian Energy Exchange, India
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Mintek Dendrill Indonesia
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Meralco Power Generation, Philippines
- Dalmia Cement Bharat India
- Intertek Mineral Services - Indonesia
- Commonwealth Bank - Australia
- Chettinad Cement Corporation Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Binh Thuan Hamico - Vietnam
- Bharathi Cement Corporation - India
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- Madhucon Powers Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- Toyota Tsusho Corporation, Japan
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Planning Commission, India
- Agrawal Coal Company - India
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- Ceylon Electricity Board - Sri Lanka
- Karaikal Port Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- London Commodity Brokers - England
- CIMB Investment Bank - Malaysia
- Orica Mining Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- Aditya Birla Group - India
- Heidelberg Cement - Germany
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- Bukit Baiduri Energy - Indonesia
- Indogreen Group - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Goldman Sachs - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Ministry of Transport, Egypt
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- VISA Power Limited - India
- Uttam Galva Steels Limited - India
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Renaissance Capital - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- Mjunction Services Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Indika Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- SMG Consultants - Indonesia
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- Siam City Cement PLC, Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Electricity Authority - India
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jorong Barutama Greston.PT - Indonesia
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- Therma Luzon, Inc, Philippines
- Rio Tinto Coal - Australia
- Rashtriya Ispat Nigam Limited - India
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
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