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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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Wednesday, 05 August 09
SMALLER DRY BULK CARRIERS TO FARE BETTER UNTIL THE END OF 2009 - SHIPPING
Marcor Shipping reported that, Smaller ship types are expected to outtake larger ones in dry bulk trade for the period until the end of the year. Th ...
Wednesday, 05 August 09
PEOPLE'S MINING SHOULD BE REGULATED UNDER RPP MINERBA
The Indonesian Institute of Science (LIPI) has called on the government to include a specific provision for people’s mining in the draft govern ...
Tuesday, 04 August 09
SRI LANKA IS LOOKING FOR 650,000 TON OF COAL NEXT YEAR FOR ITS FIRST 900 MW POWER PLANT.
COALspot.com ( Sri Lanka) : Lanka Coal Company Limited was issued a tender on 23 July 2009 to purchase 650,000 +/- 20% MT Bituminous Coal per a ...
Monday, 03 August 09
ONE YEAR CHARTER RATES FOR SUPRAMAX WAS AT AROUND USD 18,500 - VISTAAR SINGAPORE
COALspot.com (Singapore) : The freight market was flat this week with hardly any change in the BDI.The cape was up by about 4 pct and closed at 5,38 ...
Saturday, 01 August 09
APGENCO SAYS BOUGHT 500,000T MALAYSIAN COAL
The Malaysian Insider reported that, Indian state utility Andhra Pradesh Power Generation Corporation Ltd (Apgenco) has bought 500,000 tonnes of Mal ...
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- Sakthi Sugars Limited - India
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Minerals Council of Australia
- Meenaskhi Energy Private Limited - India
- Leighton Contractors Pty Ltd - Australia
- Planning Commission, India
- Heidelberg Cement - Germany
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- Anglo American - United Kingdom
- Coalindo Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Siam City Cement - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- European Bulk Services B.V. - Netherlands
- Africa Commodities Group - South Africa
- South Luzon Thermal Energy Corporation
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Kaltim Prima Coal - Indonesia
- Coastal Gujarat Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Ambuja Cements Ltd - India
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Parry Sugars Refinery, India
- Bulk Trading Sa - Switzerland
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Commonwealth Bank - Australia
- Orica Australia Pty. Ltd.
- Makarim & Taira - Indonesia
- Australian Commodity Traders Exchange
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Standard Chartered Bank - UAE
- Power Finance Corporation Ltd., India
- LBH Netherlands Bv - Netherlands
- Energy Development Corp, Philippines
- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- Carbofer General Trading SA - India
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- Kartika Selabumi Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- Central Java Power - Indonesia
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ind-Barath Power Infra Limited - India
- Singapore Mercantile Exchange
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- San Jose City I Power Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- White Energy Company Limited
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Indika Energy - Indonesia
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Interocean Group of Companies - India
- The University of Queensland
- Therma Luzon, Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- CNBM International Corporation - China
- Barasentosa Lestari - Indonesia
- Independent Power Producers Association of India
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Eastern Energy - Thailand
- TeaM Sual Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- PTC India Limited - India
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Globalindo Alam Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Videocon Industries ltd - India
- Parliament of New Zealand
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- Central Electricity Authority - India
- Ministry of Mines - Canada
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Global Green Power PLC Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Larsen & Toubro Limited - India
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- New Zealand Coal & Carbon
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Kapuas Tunggal Persada - Indonesia
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