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