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