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