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