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Monday, 27 July 09
COKING COAL, IRON-ORE LIKELY TO BENEFIT NON-INTEGRATED STEEL PRODUCERS
 Economictimes reported that, The second half of the financial year 2008-09 was one of the toughest periods for steel companies, especially the non-integrated players without access to captive sources of raw material. The double whammy of falling sales realisation and higher input costs pulled down operating profit margins significantly.
The non-integrated producers continued to pay higher raw material prices as a part of long-term contracts signed during the beginning of the year. However, as old contracts have come to an end and new ones are being signed, these companies are breathing a sigh of relief.
The new contracts have taken into consideration the current market realty. The prices of two key inputs –
–iron ore and coking coal – have come down more than 50% in the spot market. As per reports, steel firms have signed long-term contracts for coking coal at around $110-120 per tonne and iron ore at $65-70 per tonne.
The new contract prices mark a decline of around two-thirds and one-third from their yearago levels for coking coal and iron ore, respectively. Steel prices have also fallen sharply during the same period. Because of these developments, it is essential to understand the impact of the new prices on the profitability of major steel producers, especially the non-integrated ones, for the next few quarters.
Steel prices in a number of countries have been regulated in past year, and India is no exception. Current international steel prices are 50% lower than year-ago levels and in India the decline has been 25-35 %. Accordingly, depending on the company’s market (domestic and overseas) exposure, the impact on profitability of new long-term contract will vary.
Going by international prices, a company with an operating margin of around 25% last year is expected to see a contraction in margin by around 1,000-1 ,300 basis points compared to year-ago levels. It means the fall in steel product prices outweighs the drop in input costs. The only solace for such a company is the improvement in margin from the previous two quarters. Sequentially, there could be an improvement of more than 500-1 ,000 basis points in the operating margin to 10-15 %.
For instance, many international steel producers reported either losses or a 5-8 % operating margin during the Mar ’09 quarter. Such companies are definitely going to see better days ahead. In India, Tata Steel, which has significant operations in Europe, is going to be one of the key beneficiaries. The operating margin of Corus, however, is not expected to exceed 2%. The new pricing will have a bigger impact on domestic companies.
Domestic steel prices have not fallen much due to government intervention and relatively higher domestic demand. Also, coking coal, which accounted for around two-thirds of raw material cost last year, has witnessed a much sharper decline in prices compared to iron ore. And most of the coking coal consumed in India is imported and its pricing depends more on the international environment rather than the domestic market. Hence new coking coal contract prices will capture the poor international market conditions.
The benefit of new long-term contracts for domestic players would depend on factors such as the extent of dependence on external suppliers for raw materials, actual contract prices and the month from which the contract became effective, among others. Higher the dependence on external suppliers, more the benefit.
Of the top five listed steel companies, JSW Steel and Ispat Industries are likely to benefit the most. The average operating margin from the September quarter onwards is expected to expand by around 1,000-1,500 basis points compared to the Mar ’09 quarter. The June quarter, however, will see a partial impact, depending on when the new contracts came into force.
Other top players that are likely to benefit are Steel Authority of India (Sail) and Jindal Steel & Power. Both of them are self-sufficient in iron ore but depend on outside suppliers for coking coal. The positive impact on the operating margin of these companies on account of the new prices would not be more than 500 basis points though.
Source: Economic Times - India Times
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Friday, 14 August 09
GUACOLDA STARTS THIRD COAL-FIRED UNIT
Macorship reported that, Chile’s Empresa Electrica Guacolda said that the third unit at its Guacolda coal-fired power plant began supplying po ...
Thursday, 13 August 09
RIO PREPARES COAL IPO AFTER FAILING TO FIND BUYER
Bloomberg reported that, Rio Tinto Group, the world’s third- largest mining company, is preparing an initial public offering for its U.S. ...
Thursday, 13 August 09
NOBLE'S PROFIT DOUBLES ON GLOUCESTER COAL ACQUISITION
Bloomberg reported that, Noble Group Ltd., a Hong Kong-based supplier of raw materials from soybeans to coal, said second- quarter profit more than ...
Thursday, 13 August 09
CHINA COAL-PRICES UNCHANGED, BUT LIKELY TO MOVE HIGHER
Alibaba reported that, Spot coal prices in China's top coal port Qinhuangdao were unchanged from a week earlier, but are still looking bullish in t ...
Thursday, 13 August 09
INDONESIA'S BERAU COAL SEES 2010 OUTPUT UP 16 PCT
Reuters reported that, Indonesia's fifth-largest coal miner, PT Berau Coal, expects 2010 production to be nearly 16 percent higher than this year, ...
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- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- Directorate Of Revenue Intelligence - India
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
- Indo Tambangraya Megah - Indonesia
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- India Bulls Power Limited - India
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- European Bulk Services B.V. - Netherlands
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- Sree Jayajothi Cements Limited - India
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- IEA Clean Coal Centre - UK
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- Ministry of Transport, Egypt
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- Tata Chemicals Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- Maheswari Brothers Coal Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- London Commodity Brokers - England
- Petron Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Bharathi Cement Corporation - India
- PTC India Limited - India
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Parliament of New Zealand
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bhushan Steel Limited - India
- Banpu Public Company Limited - Thailand
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Antam Resourcindo - Indonesia
- GAC Shipping (India) Pvt Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Sakthi Sugars Limited - India
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Ambuja Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Salva Resources Pvt Ltd - India
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- SN Aboitiz Power Inc, Philippines
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Rashtriya Ispat Nigam Limited - India
- Grasim Industreis Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Mercuria Energy - Indonesia
- Eastern Energy - Thailand
- Wilmar Investment Holdings
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Australian Coal Association
- MS Steel International - UAE
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- International Coal Ventures Pvt Ltd - India
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Tamil Nadu electricity Board
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
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