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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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Monday, 10 August 09
S.KOREA KOSPO ISSUES SPOT, TERM COAL TENDERS
Korea Southern Power Co Ltd (KOSPO) is seeking 1.5 million tonnes of steam coal per year for delivery from October 2009 through September 2012 via a ...
Monday, 10 August 09
POLICY HURDLES DELAY NALCO'S U$$ 4.166 BILLION OVERSEAS PROJECTS
National Aluminium Company Ltd's (NALCO) greenfield projects in overseas markets like Indonesia and Iran are in limbo because of political
...
Monday, 10 August 09
SAIL, TATA STEEL TO REDUCE COAL IMPORTS BY PARADIP PORT
World Shipping News reported that, Steel Authority of India Ltd (SAIL) and Tata Steel have scaled down coal imports through Paradip Port, hit by pre ...
Monday, 10 August 09
NTPC LIKELY TO SET UP POWER PLANTS IN NIGERIA AND SRILANKA
Economic time reported that, National Thermal Power Corporation Limited (NTPC), country's largest power utility, is likely to set up power plants i ...
Monday, 10 August 09
VINACOMIN TO SELL COAL AT MARKET PRICES TO DOMESTIC USERS
VNBusinessNews.com - Reuters reported that Vietnamese government has agreed to let coal monopoly Vinacomin sell coal at market oriented prices to do ...
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- SMG Consultants - Indonesia
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- Lanco Infratech Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- GAC Shipping (India) Pvt Ltd
- GN Power Mariveles Coal Plant, Philippines
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Maharashtra Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Dalmia Cement Bharat India
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Minerals Council of Australia
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- Eastern Energy - Thailand
- Petron Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Power Finance Corporation Ltd., India
- Cigading International Bulk Terminal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- LBH Netherlands Bv - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Mercuria Energy - Indonesia
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Chamber of Mines of South Africa
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- Posco Energy - South Korea
- Planning Commission, India
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- Vedanta Resources Plc - India
- Heidelberg Cement - Germany
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Sical Logistics Limited - India
- Simpson Spence & Young - Indonesia
- Malabar Cements Ltd - India
- McConnell Dowell - Australia
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Latin American Coal - Colombia
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- The Treasury - Australian Government
- Aditya Birla Group - India
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Marubeni Corporation - India
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- Energy Development Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Straits Asia Resources Limited - Singapore
- Miang Besar Coal Terminal - Indonesia
- GMR Energy Limited - India
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- Cement Manufacturers Association - India
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- Orica Australia Pty. Ltd.
- Therma Luzon, Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Indika Energy - Indonesia
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Commonwealth Bank - Australia
- PTC India Limited - India
- Ministry of Finance - Indonesia
- London Commodity Brokers - England
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Kideco Jaya Agung - Indonesia
- Globalindo Alam Lestari - Indonesia
- Indian Oil Corporation Limited
- Chettinad Cement Corporation Ltd - India
- Kapuas Tunggal Persada - Indonesia
- OPG Power Generation Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- PNOC Exploration Corporation - Philippines
- The University of Queensland
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- PowerSource Philippines DevCo
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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