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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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Thursday, 06 August 09
CHINA JULY COAL IMPORTS AT 9.5 MLN T, DEMAND FIRM
* Coal imports at key ports in July 2.8 times year-ago levels
* July coal imports down nearly 40 percent from June
* China still buying overseas c ...
Thursday, 06 August 09
CASES FILED AGAINST ESSAR ALGOMA OVER TERMINATED COAL SHIPMENTS
Steel Guru reported that, It is reported that units of International Coal Group Inc and Arch Coal Inc have filed federal lawsuits in the same court ...
Thursday, 06 August 09
COMPULSORY MINE RECLAMATION PROPOSED FOR A MINING'S LIFETIME
Tambang reported that, A data from the Forestry Ministry showed that almost 65 percent of mining activities operated under contract of work, c ...
Thursday, 06 August 09
MINING PERMITS FOR THOSE COMMITTED TO SMELTER DEVELOPMENT ONLY
Tambang reported tht, Concrete and tangible endeavors are key to guarantee the attainment of added value from mining sector. The Indonesian Ministry ...
Thursday, 06 August 09
PRESS RELEASE - CZECH COAL CONTESTS THE J&T AND IPO MERGER
Prague, 3 August 2009 - The Czech Coal Group filed today objections to the proposed merger of the J&T Group and International Power Opatovice (I ...
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- The State Trading Corporation of India Ltd
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- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- Electricity Generating Authority of Thailand
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Central Electricity Authority - India
- Bangladesh Power Developement Board
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- Parry Sugars Refinery, India
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Indian Energy Exchange, India
- Billiton Holdings Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Kaltim Prima Coal - Indonesia
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- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
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- Lanco Infratech Ltd - India
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- European Bulk Services B.V. - Netherlands
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- Alfred C Toepfer International GmbH - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- MS Steel International - UAE
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- Savvy Resources Ltd - HongKong
- Georgia Ports Authority, United States
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- Holcim Trading Pte Ltd - Singapore
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Latin American Coal - Colombia
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- Independent Power Producers Association of India
- White Energy Company Limited
- McConnell Dowell - Australia
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- Mintek Dendrill Indonesia
- Planning Commission, India
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Minerals Council of Australia
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- Economic Council, Georgia
- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- The Treasury - Australian Government
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- Meralco Power Generation, Philippines
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Bukit Makmur.PT - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Central Java Power - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Romanian Commodities Exchange
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Mjunction Services Limited - India
- Iligan Light & Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- CIMB Investment Bank - Malaysia
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Sinarmas Energy and Mining - Indonesia
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- SMG Consultants - Indonesia
- Global Coal Blending Company Limited - Australia
- Ceylon Electricity Board - Sri Lanka
- IEA Clean Coal Centre - UK
- Formosa Plastics Group - Taiwan
- Vedanta Resources Plc - India
- San Jose City I Power Corp, Philippines
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- ASAPP Information Group - India
- Parliament of New Zealand
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- Baramulti Group, Indonesia
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Grasim Industreis Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- PTC India Limited - India
- Mercator Lines Limited - India
- Makarim & Taira - Indonesia
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- Africa Commodities Group - South Africa
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Bhoruka Overseas - Indonesia
- Indogreen Group - Indonesia
- GMR Energy Limited - India
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Australian Coal Association
- The University of Queensland
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Energy Development Corp, Philippines
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- IHS Mccloskey Coal Group - USA
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- Thai Mozambique Logistica
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
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