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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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Sunday, 09 August 09
TNEB ENNORE PORT CALLS TO TRIPLE COAL OUTPUT
World Shipping News reported that, the Tamil Nadu Electricity Board (TNEB) has asked Ennore Port Ltd (EPL) to increase the port’s installed ca ...
Saturday, 08 August 09
TWO / THREE YEAR CHARTER RATES FOR SUPRAMAX IS AROUND US$ 15,000-16,000 PER DAY - CAPT. REDDY
COALspot.com (Singapore): The dry bulk market tumbled this week and the BDI dropped by almost 17% and closed at 2,772 points.
The cape and panam ...
Saturday, 08 August 09
SULTAN MINING SIGNS P8-BILLION, 10-YEAR COAL-SUPPLY CONTRACT WITH KEPCO POWER CORP.
COAL developer Sultan Mining and Energy Development Corp. (SMEDC) reported on Thursday that its subsidiary MG Mining and Energy Corp. signed an P8-b ...
Friday, 07 August 09
NEED TO HIKE DOMESTIC PRICES - COAL INDIA
WSJ reported that, The chairman of Coal India Ltd., the country's biggest coal producer, Friday said there was a need to hike domestic coal prices ...
Friday, 07 August 09
INDONESIA COAL NEWS UPDATES
PTBA to Produce 13 Million Tons
President Director of Tambang Batubara Bukit Asam (PTBA), Sukrisno has estimated coal production of the company th ...
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- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- Coal and Oil Company - UAE
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Sarangani Energy Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- Timah Investasi Mineral - Indoneisa
- Indian Energy Exchange, India
- Parliament of New Zealand
- Miang Besar Coal Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- The University of Queensland
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Bhatia International Limited - India
- PNOC Exploration Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Planning Commission, India
- Central Electricity Authority - India
- ICICI Bank Limited - India
- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- PTC India Limited - India
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- Meralco Power Generation, Philippines
- Australian Commodity Traders Exchange
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Tamil Nadu electricity Board
- Aboitiz Power Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- Oldendorff Carriers - Singapore
- Minerals Council of Australia
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Mintek Dendrill Indonesia
- Ambuja Cements Ltd - India
- Power Finance Corporation Ltd., India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- Parry Sugars Refinery, India
- Sindya Power Generating Company Private Ltd
- Larsen & Toubro Limited - India
- Marubeni Corporation - India
- Indo Tambangraya Megah - Indonesia
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- Anglo American - United Kingdom
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Heidelberg Cement - Germany
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Videocon Industries ltd - India
- Aditya Birla Group - India
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- VISA Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Gujarat Sidhee Cement - India
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- Baramulti Group, Indonesia
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Makarim & Taira - Indonesia
- Kartika Selabumi Mining - Indonesia
- India Bulls Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Chettinad Cement Corporation Ltd - India
- Karaikal Port Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Krishnapatnam Port Company Ltd. - India
- Siam City Cement PLC, Thailand
- Thai Mozambique Logistica
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Savvy Resources Ltd - HongKong
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
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