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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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Thursday, 02 March 23
DRY BULK MARKET: THE WAY CHINA GOES, SO GOES THE MARKET - BIMCO
We expect demand growth within the 1.5-2.5% range in 2023, driven by China’s economic recovery. Improvements in consumer sentiment should hel ...
Thursday, 02 March 23
INDIA, CHINA DEMAND BOOST LOW-RANK THERMAL COAL PRICES IN ASIA - RUSSELL, REUTERS
Signs of stronger import demand from India have arrested the decline in price of the thermal coal grades most commonly sought by the world’s ...
Thursday, 02 March 23
INDIA CHEERS THE RETURN OF ‘KING COAL’ AS INDUSTRY SEES BUOYANT FUTURE - REUTERS
India’s coal industry celebrated the return of its major conference after a three-year pandemic hiatus by presenting a bullish view of demand ...
Wednesday, 01 March 23
GEO CONNECT ASIA RETURNS IN MARCH TO ACCELERATE THE REGION’S GEOSPATIAL AND LOCATION INTELLIGENCE CAPABILITIES
Press Release: The third edition of GCA will be held in conjunction with Digital Construction Asia and the inaugural Drones Asia – an event d ...
Wednesday, 01 March 23
THE DECLINE IN THE COAL PRICE SINCE THE BEGINNING OF THE YEAR HAS BEEN SIGNIFICANT - INTERMODAL
Last week, the front-month API2 future rose by 3.5%, but since the beginning of the year the future has fallen by 39% to $136.65/t, while the Newca ...
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- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- Cement Manufacturers Association - India
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- SN Aboitiz Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Xindia Steels Limited - India
- Independent Power Producers Association of India
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- The University of Queensland
- Sree Jayajothi Cements Limited - India
- Sojitz Corporation - Japan
- Karaikal Port Pvt Ltd - India
- Commonwealth Bank - Australia
- The Treasury - Australian Government
- San Jose City I Power Corp, Philippines
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- IHS Mccloskey Coal Group - USA
- Miang Besar Coal Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Bharathi Cement Corporation - India
- GVK Power & Infra Limited - India
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Alfred C Toepfer International GmbH - Germany
- Economic Council, Georgia
- Energy Development Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- SMG Consultants - Indonesia
- Sakthi Sugars Limited - India
- Rio Tinto Coal - Australia
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- London Commodity Brokers - England
- McConnell Dowell - Australia
- Indian Energy Exchange, India
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- Maheswari Brothers Coal Limited - India
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Uttam Galva Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Sindya Power Generating Company Private Ltd
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- Interocean Group of Companies - India
- Aditya Birla Group - India
- Bulk Trading Sa - Switzerland
- Renaissance Capital - South Africa
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- Thiess Contractors Indonesia
- PNOC Exploration Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- Romanian Commodities Exchange
- Energy Link Ltd, New Zealand
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- South Luzon Thermal Energy Corporation
- Marubeni Corporation - India
- Semirara Mining Corp, Philippines
- Central Java Power - Indonesia
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Bukit Baiduri Energy - Indonesia
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Leighton Contractors Pty Ltd - Australia
- Coal and Oil Company - UAE
- Planning Commission, India
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Wilmar Investment Holdings
- Antam Resourcindo - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- TeaM Sual Corporation - Philippines
- Ministry of Mines - Canada
- White Energy Company Limited
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