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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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Tuesday, 11 August 09
INDONESIA'S COAL EXPORTS TO INDIA WILL BE EXEMPTED FROM DUTIES STARTING JANUARY 1, 2013 - BERITA SORE
Berita sore reported that, ASEAN is scheduled to sign a long-awaited Free Trade Agreement (FTA) with India in Bangkok on Thursday aimed at boosting ...
Tuesday, 11 August 09
ZAMBIAN COAL BUYERS CONTINUE IMPORTING COAL FROM ZIMBABWE
Lusaka Times reported that, Coal mining companies have bemoaned the lack of market for their produce as prospective buyers continue importing the co ...
Monday, 10 August 09
NOMINAL HIKE IN COAL PRICES SOON - MEDIA
The hindu business reported that, a marginal hike in coal prices is in the offing. "I will be soon approaching the Prime Minister on the matter ...
Monday, 10 August 09
MANGALAM CEMENT PLACES ORDER FOR CAPTIVE POWER PLANT
Steel Guru reported that, Mangalam Cement Ltd has announced that the company on August 6th 2009 finalized order for Captive Thermal Power Plant of 1 ...
Monday, 10 August 09
VIET NAM COAL EXPORTS HIT 13.5 MILLION TONNES
VietNamNet Bridge reported that, Viet Nam exported more than 13.5 million tonnes of coal in the first seven months of this year, equal to the same p ...
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- Kepco SPC Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
- Straits Asia Resources Limited - Singapore
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Baramulti Group, Indonesia
- Price Waterhouse Coopers - Russia
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- AsiaOL BioFuels Corp., Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karbindo Abesyapradhi - Indoneisa
- Jindal Steel & Power Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Generating Authority of Thailand
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Uttam Galva Steels Limited - India
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- Ministry of Mines - Canada
- Gujarat Sidhee Cement - India
- Mercator Lines Limited - India
- Standard Chartered Bank - UAE
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dalmia Cement Bharat India
- Bukit Asam (Persero) Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- Kapuas Tunggal Persada - Indonesia
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- MS Steel International - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- Orica Australia Pty. Ltd.
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- Central Java Power - Indonesia
- McConnell Dowell - Australia
- VISA Power Limited - India
- Commonwealth Bank - Australia
- Makarim & Taira - Indonesia
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- Coal and Oil Company - UAE
- Ind-Barath Power Infra Limited - India
- Formosa Plastics Group - Taiwan
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Medco Energi Mining Internasional
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- Mjunction Services Limited - India
- Videocon Industries ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- Vizag Seaport Private Limited - India
- Marubeni Corporation - India
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Deloitte Consulting - India
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Parry Sugars Refinery, India
- Barasentosa Lestari - Indonesia
- Grasim Industreis Ltd - India
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- Indian Energy Exchange, India
- The Treasury - Australian Government
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- OPG Power Generation Pvt Ltd - India
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Coal Blending Company Limited - Australia
- Vedanta Resources Plc - India
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- PNOC Exploration Corporation - Philippines
- Economic Council, Georgia
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- Energy Link Ltd, New Zealand
- Energy Development Corp, Philippines
- The University of Queensland
- Indo Tambangraya Megah - Indonesia
- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- Carbofer General Trading SA - India
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