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