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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, 26 January 23
AUSTRALIA'S CORONADO GLOBAL SEES COAL PRICES RISING ON RESUMING CHINA IMPORTS - REUTERS
Australia’s Coronado Global Resources said on Tuesday resuming metallurgical coal imports to China would likely push sea-borne coal prices hi ...
Monday, 23 January 23
CHINA'S MAJOR COAL-PRODUCING PROVINCE ACCELERATES DIGITAL TRANSFORMATION - XINHUA
At Chindata Group’s big-data industrial park in Lingqiu County of Datong City, hundreds of thousands of servers are running round-the-clock t ...
Monday, 23 January 23
CHINA'S COAL-RICH PROVINCE SEES COAL PRODUCTION INCREASE IN 2022 - XINHUA
North China’s coal-rich province of Shanxi saw its coal production hit 1.31 billion tonnes in 2022, up 8.7 percent year on year, local author ...
Wednesday, 18 January 23
MARKET INSIGHT - INTERMODAL
From Feb 5, another price cap will be introduced to Russian fuels and oil products, adding to the one for crude oil, already in place from Dec. 3. ...
Tuesday, 17 January 23
FRAUD IS THE BIGGEST THREAT TO CARGO LOSSES - TT CLUB
The almost exclusive use of online facilities to process business transactions allows a myriad of fraudulent pursuits to find opportunities within ...
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- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- Rashtriya Ispat Nigam Limited - India
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- Thai Mozambique Logistica
- Africa Commodities Group - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Savvy Resources Ltd - HongKong
- Independent Power Producers Association of India
- The State Trading Corporation of India Ltd
- Australian Commodity Traders Exchange
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
- Ceylon Electricity Board - Sri Lanka
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- Coal and Oil Company - UAE
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Bhushan Steel Limited - India
- India Bulls Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Latin American Coal - Colombia
- Australian Coal Association
- Kapuas Tunggal Persada - Indonesia
- Agrawal Coal Company - India
- MS Steel International - UAE
- Bhatia International Limited - India
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- GMR Energy Limited - India
- Anglo American - United Kingdom
- GVK Power & Infra Limited - India
- SMC Global Power, Philippines
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- Karbindo Abesyapradhi - Indoneisa
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bayan Resources Tbk. - Indonesia
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- PTC India Limited - India
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Thiess Contractors Indonesia
- Manunggal Multi Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Sical Logistics Limited - India
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Siam City Cement - Thailand
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Mjunction Services Limited - India
- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- AsiaOL BioFuels Corp., Philippines
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- CNBM International Corporation - China
- Commonwealth Bank - Australia
- Kohat Cement Company Ltd. - Pakistan
- Vijayanagar Sugar Pvt Ltd - India
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- Formosa Plastics Group - Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Xindia Steels Limited - India
- Cement Manufacturers Association - India
- The University of Queensland
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- PowerSource Philippines DevCo
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- Indian Energy Exchange, India
- Electricity Generating Authority of Thailand
- Coalindo Energy - Indonesia
- Tamil Nadu electricity Board
- Price Waterhouse Coopers - Russia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
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