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