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