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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, 15 December 22
MARKET INSIGHT - INTERMODAL
While observing the ship repair market very close to the end of the year, we are confident that shipyards worldwide are entering a new era. The nex ...
Tuesday, 13 December 22
STRONG COAL PRICES SUPPORT ROBUST EARNINGS AT INDONESIAN COAL MINERS - FITCH RATINGS
Fitch Ratings expects cash flow generation at Indonesian coal miners to remain strong in 2023, based on its forecast for coal prices to remain high ...
Tuesday, 13 December 22
BIMCO CII CLAUSE FINALLY RELEASED: DOES IT MAKE ANY SENSE OF CCI? - WFW
WHAT IS CII?
The new International Maritime Organisation’s (“IMO’s”) Carbon Intensity Indicator (“CII”) cer ...
Tuesday, 13 December 22
COAL BASE RAMPS UP ENERGY SUPPLY FOR WINTER NEEDS - XINHUA
Inner Mongolia Autonomous Region, China’s leading coal production base, has kicked its production into high gear to meet heating needs as col ...
Tuesday, 13 December 22
AUSTRALIA TO CAP PRICES OF COAL, GAS TO DRIVE DOWN ENERGY BILLS - REUTERS
Australia will cap coal and gas prices for a year in a bid to shave utility bills for households and businesses hit by soaring costs because of the ...
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- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- Attock Cement Pakistan Limited
- London Commodity Brokers - England
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- Grasim Industreis Ltd - India
- PTC India Limited - India
- Videocon Industries ltd - India
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- Karaikal Port Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Makarim & Taira - Indonesia
- Marubeni Corporation - India
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- McConnell Dowell - Australia
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- Posco Energy - South Korea
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Rashtriya Ispat Nigam Limited - India
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- GMR Energy Limited - India
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Siam City Cement PLC, Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- GVK Power & Infra Limited - India
- Bharathi Cement Corporation - India
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Gujarat Sidhee Cement - India
- Directorate Of Revenue Intelligence - India
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- Vizag Seaport Private Limited - India
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- White Energy Company Limited
- Parry Sugars Refinery, India
- Bayan Resources Tbk. - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- European Bulk Services B.V. - Netherlands
- Borneo Indobara - Indonesia
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Indian Energy Exchange, India
- Indo Tambangraya Megah - Indonesia
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Australian Commodity Traders Exchange
- Commonwealth Bank - Australia
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- Eastern Coal Council - USA
- Romanian Commodities Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Sakthi Sugars Limited - India
- Semirara Mining Corp, Philippines
- Economic Council, Georgia
- SMC Global Power, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Toyota Tsusho Corporation, Japan
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- Australian Coal Association
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- GAC Shipping (India) Pvt Ltd
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- Alfred C Toepfer International GmbH - Germany
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Meralco Power Generation, Philippines
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
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