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