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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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Tuesday, 17 January 23
CHINA'S SHANXI TARGETS 2023 COAL PRODUCTION OF NEARLY 1.37B TONS - XINHUA
China’s coal-rich province of Shanxi has set a coal production target of nearly 1.37 billion metric tons for 2023, according to a government ...
Tuesday, 17 January 23
MARKET INSIGHT - INTERMODAL
Rumor has it that the New Year has come, to set the pace in, for Russia to continue hostilities against Ukraine. Ten months on the go, into Russia& ...
Tuesday, 17 January 23
INDONESIA IS ACCOUNTING FOR 32.3% OF THE GLOBAL SEABORNE COAL MARKET IN 2022 - BENCHERO 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, Benchero ...
Tuesday, 10 January 23
INDONESIAN HBA IS SEEING A SPIKE IN JANUARY 2023 INSTEAD OF A SIGNIFICANT FALL IN DECEMBER 2022
COALspot.com: Indonesian Coal Price Reference up 8.43% in January 2023.
HBA is seeing a dramatic spike in January 2023 i ...
Sunday, 08 January 23
INDIAN COAL POWER PLANTS SHOULD BE COMPENSATED FOR 2022 FORCED GENERATION – REGULATOR : REUTERS
Indian power plants that rely on imported coal should be fully compensated when forced to supply electricity, the country’s power regulator s ...
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- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Jorong Barutama Greston.PT - Indonesia
- Mintek Dendrill Indonesia
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- GAC Shipping (India) Pvt Ltd
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- McConnell Dowell - Australia
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- London Commodity Brokers - England
- Aditya Birla Group - India
- The University of Queensland
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Sinarmas Energy and Mining - Indonesia
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Global Business Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Baramulti Group, Indonesia
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- Sojitz Corporation - Japan
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Singapore Mercantile Exchange
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- Medco Energi Mining Internasional
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- Indonesian Coal Mining Association
- Straits Asia Resources Limited - Singapore
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Kepco SPC Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- Manunggal Multi Energi - Indonesia
- Semirara Mining Corp, Philippines
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Madhucon Powers Ltd - India
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- Coastal Gujarat Power Limited - India
- Orica Australia Pty. Ltd.
- Globalindo Alam Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
- Georgia Ports Authority, United States
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- Directorate General of MIneral and Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- CNBM International Corporation - China
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Rio Tinto Coal - Australia
- Economic Council, Georgia
- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Trasteel International SA, Italy
- VISA Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Anglo American - United Kingdom
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Electricity Authority, New Zealand
- Power Finance Corporation Ltd., India
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- White Energy Company Limited
- Planning Commission, India
- Therma Luzon, Inc, Philippines
- ICICI Bank Limited - India
- Malabar Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- Goldman Sachs - Singapore
- Tamil Nadu electricity Board
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kartika Selabumi Mining - Indonesia
- Electricity Generating Authority of Thailand
- ASAPP Information Group - India
- Parliament of New Zealand
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- Wood Mackenzie - Singapore
- Pendopo Energi Batubara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- SMC Global Power, Philippines
- Kobexindo Tractors - Indoneisa
- Toyota Tsusho Corporation, Japan
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