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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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Wednesday, 12 October 22
MARKET INSIGHT - INTERMODAL
Sale and Purchase activity during the first three quarters of 2022 has been remarkable.
Focusing only on Tankers and Bulkers, such v ...
Monday, 10 October 22
ENERGY TRANSITION BOOSTS GLOBAL LONG-TERM DEMAND FOR METALS - FITCH RATINGS
The energy transition will significantly increase demand for metals used in manufacturing of electric vehicles (EVs) and renewable power generation ...
Monday, 10 October 22
GLOBAL CEOS EXPECT IMPENDING RECESSION TO BE 'SHORT AND SHARP,' POLL SHOWS - CNBC
Global CEOs are anticipating a recession in the next 12 months, according to a new survey by professional services firm KPMG, which said more than ...
Thursday, 06 October 22
AUSTRALIA’S RESOURCES REVENUE TO HIT RECORD AMID UKRAINE CONFLICT - REUTERS
Australian resources and energy export earnings are forecast to jump 7% to a record A$450 billion ($290 billion) this fiscal year, bolstered by soa ...
Thursday, 06 October 22
COAL INDIA ASKED TO ENHANCE SUPPLY TO THERMAL POWER PLANTS - IANS
With the festival season round the corner, Coal India Ltd. has been directed by the government to scale up dispatch to thermal power plants.
&n ...
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- Indian Oil Corporation Limited
- Kumho Petrochemical, South Korea
- Meralco Power Generation, Philippines
- Carbofer General Trading SA - India
- Parliament of New Zealand
- CIMB Investment Bank - Malaysia
- Ministry of Finance - Indonesia
- Meenaskhi Energy Private Limited - India
- Goldman Sachs - Singapore
- Australian Commodity Traders Exchange
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Thai Mozambique Logistica
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- Bukit Makmur.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Anglo American - United Kingdom
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Videocon Industries ltd - India
- Commonwealth Bank - Australia
- Deloitte Consulting - India
- Eastern Energy - Thailand
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
- ICICI Bank Limited - India
- VISA Power Limited - India
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- Independent Power Producers Association of India
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Coal and Oil Company - UAE
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- Aboitiz Power Corporation - Philippines
- Renaissance Capital - South Africa
- Star Paper Mills Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- Bhushan Steel Limited - India
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- Indonesian Coal Mining Association
- Asmin Koalindo Tuhup - Indonesia
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Maheswari Brothers Coal Limited - India
- Vedanta Resources Plc - India
- Sarangani Energy Corporation, Philippines
- Africa Commodities Group - South Africa
- Toyota Tsusho Corporation, Japan
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- Banpu Public Company Limited - Thailand
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wilmar Investment Holdings
- Electricity Generating Authority of Thailand
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- SMC Global Power, Philippines
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- Siam City Cement - Thailand
- Rio Tinto Coal - Australia
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- IHS Mccloskey Coal Group - USA
- Wood Mackenzie - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- Coastal Gujarat Power Limited - India
- Attock Cement Pakistan Limited
- Australian Coal Association
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Straits Asia Resources Limited - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- CNBM International Corporation - China
- Billiton Holdings Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- PNOC Exploration Corporation - Philippines
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Central Java Power - Indonesia
- Riau Bara Harum - Indonesia
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- Minerals Council of Australia
- Directorate General of MIneral and Coal - Indonesia
- Electricity Authority, New Zealand
- Directorate Of Revenue Intelligence - India
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Port Waratah Coal Services - Australia
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