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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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- Goldman Sachs - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Marubeni Corporation - India
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Meenaskhi Energy Private Limited - India
- Sojitz Corporation - Japan
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Indian Energy Exchange, India
- Singapore Mercantile Exchange
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Indogreen Group - Indonesia
- Port Waratah Coal Services - Australia
- The State Trading Corporation of India Ltd
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- Latin American Coal - Colombia
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- PTC India Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Lanco Infratech Ltd - India
- Power Finance Corporation Ltd., India
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- LBH Netherlands Bv - Netherlands
- Aboitiz Power Corporation - Philippines
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- PowerSource Philippines DevCo
- Vedanta Resources Plc - India
- Billiton Holdings Pty Ltd - Australia
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Uttam Galva Steels Limited - India
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kapuas Tunggal Persada - Indonesia
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Planning Commission, India
- Bhatia International Limited - India
- Antam Resourcindo - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Videocon Industries ltd - India
- London Commodity Brokers - England
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Electricity Authority - India
- Indo Tambangraya Megah - Indonesia
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Riau Bara Harum - Indonesia
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Romanian Commodities Exchange
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- Altura Mining Limited, Indonesia
- Ambuja Cements Ltd - India
- Indika Energy - Indonesia
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Bulk Trading Sa - Switzerland
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Tamil Nadu electricity Board
- Jindal Steel & Power Ltd - India
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- The University of Queensland
- Vijayanagar Sugar Pvt Ltd - India
- Coal and Oil Company - UAE
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Eastern Coal Council - USA
- Therma Luzon, Inc, Philippines
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Gujarat Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bangladesh Power Developement Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- CIMB Investment Bank - Malaysia
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- The Treasury - Australian Government
- Wood Mackenzie - Singapore
- Star Paper Mills Limited - India
- Intertek Mineral Services - Indonesia
- Gujarat Sidhee Cement - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Toyota Tsusho Corporation, Japan
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- Energy Development Corp, Philippines
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Borneo Indobara - Indonesia
- Parry Sugars Refinery, India
- Thai Mozambique Logistica
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Metalloyd Limited - United Kingdom
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