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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, 26 February 23
MAWANI AND JEDDAH CHAMBER SIGN AN AGREEMENT TO BUILD INTEGRATED LOGISTICS PARK
Press Release: The Saudi Ports Authority (Mawani) and Jeddah Chamber of Commerce and Industry have today inked an agreement to set up an integrated ...
Saturday, 25 February 23
INDONESIA IS STILL BY FAR THE TOP SUPPLIER OF COAL TO CHINA - BANCHERO COSTA
After a slow start in the first quarter, global coal trade has really picked up pace last year, and is now fully back to pre-Covid levels, said ban ...
Wednesday, 22 February 23
MARKET INSIGHT - INTERMODAL
The short-term outlook of the global soybean market is currently pivoted by a combination of weather patterns that are affecting the harvest progre ...
Saturday, 18 February 23
OIL UNLIKELY TO BREAK ABOVE $100/BBL THIS YEAR, J.P.MORGAN SAYS –- REUTERS
Brent oil prices are unlikely to breach the $100 a barrel level this year, barring any significant geopolitical drivers, with OPEC+ potentially add ...
Saturday, 18 February 23
CHINA'S COAL PRICES FALL TO 1 YR-LOW, CLOUDING DEMAND AND IMPORT OUTLOOK - REUTERS
China’s thermal coal prices hit their lowest levels in a year this week on rising inventories as domestic mine production is recovering faste ...
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- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Meenaskhi Energy Private Limited - India
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Kohat Cement Company Ltd. - Pakistan
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Bahari Cakrawala Sebuku - Indonesia
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- Malabar Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Sical Logistics Limited - India
- Pendopo Energi Batubara - Indonesia
- Lanco Infratech Ltd - India
- Makarim & Taira - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
- Singapore Mercantile Exchange
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Chamber of Mines of South Africa
- Petron Corporation, Philippines
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- The University of Queensland
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- Orica Mining Services - Indonesia
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- SMC Global Power, Philippines
- Gujarat Electricity Regulatory Commission - India
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Carbofer General Trading SA - India
- Iligan Light & Power Inc, Philippines
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Heidelberg Cement - Germany
- Australian Coal Association
- Mercator Lines Limited - India
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Jaiprakash Power Ventures ltd
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Marubeni Corporation - India
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- Orica Australia Pty. Ltd.
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Posco Energy - South Korea
- VISA Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Chettinad Cement Corporation Ltd - India
- Wilmar Investment Holdings
- Tata Chemicals Ltd - India
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- MS Steel International - UAE
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Essar Steel Hazira Ltd - India
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- European Bulk Services B.V. - Netherlands
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Latin American Coal - Colombia
- GAC Shipping (India) Pvt Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- CIMB Investment Bank - Malaysia
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- Parry Sugars Refinery, India
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- White Energy Company Limited
- LBH Netherlands Bv - Netherlands
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Salva Resources Pvt Ltd - India
- Star Paper Mills Limited - India
- Larsen & Toubro Limited - India
- Anglo American - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- Indika Energy - Indonesia
- Renaissance Capital - South Africa
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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