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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, 03 November 22
HANDYSIZE VALUES MOVING UP IN OCTOBER, WHILE LNG VALUES SKYROCKET - VESSELSVALUE
Handysize values have increased this month across most ages, following a period of decline. Values for generic 10 year old Handysizes have moved up ...
Thursday, 03 November 22
EUROPEAN GAS SUPPLY SURPLUS, NOVEMBER HBA DOWN TO US$ 308.2 PER TON - ESDM
European gas supply conditions have a major influence in determining fluctuations in the Reference Coal Price (HBA). The November 2022 HBA recorded ...
Wednesday, 02 November 22
MARKET INSIGHT - INTERMODAL
Only five weeks before western sanctions’ full effect, uncertainty over energy has markets and governments on the edge. What was initially th ...
Tuesday, 01 November 22
CHINA COAL TRADE DISRUPTED BY COVID OUTBREAKS AS WINTER LOOMS - REUTERS
China’s strict COVID-19 policy is constraining coal supplies and pushing up prices, industry officials and traders say, just weeks before the ...
Monday, 31 October 22
U.S. COAL-FIRED GENERATION DECLINING AFTER BRIEF RISE LAST YEAR - EIA
We expect 6% less U.S. coal-fired generation in 2022 than in 2021, according to our latest Short-Term Energy Outlook (STEO). Although coal-fired ge ...
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- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- PowerSource Philippines DevCo
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Coal and Oil Company - UAE
- Kepco SPC Power Corporation, Philippines
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Miang Besar Coal Terminal - Indonesia
- Straits Asia Resources Limited - Singapore
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- Sojitz Corporation - Japan
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- CNBM International Corporation - China
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Cement Manufacturers Association - India
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Larsen & Toubro Limited - India
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- SMG Consultants - Indonesia
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Petron Corporation, Philippines
- Bhoruka Overseas - Indonesia
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- Coalindo Energy - Indonesia
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- Maheswari Brothers Coal Limited - India
- Bangladesh Power Developement Board
- Indo Tambangraya Megah - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Ministry of Finance - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Attock Cement Pakistan Limited
- Ambuja Cements Ltd - India
- VISA Power Limited - India
- Timah Investasi Mineral - Indoneisa
- CIMB Investment Bank - Malaysia
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Latin American Coal - Colombia
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- White Energy Company Limited
- Kapuas Tunggal Persada - Indonesia
- Eastern Energy - Thailand
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Mercator Lines Limited - India
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Mercuria Energy - Indonesia
- Indian Oil Corporation Limited
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
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