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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, 30 July 09
KOMIPO OFFERED 3 MILLION MT IN TENDER, TEN TIMES OVERSUBSCRIBED
Korea Midland has received offers for 3 million mt of bituminous steam coal in its latest tender despite the power utility seeking only 300,000 mt, ...
Thursday, 30 July 09
PNOC FORGES JOINT VENTURES AS STEPS UP COAL OPERATIONS
The Philippine National Oil Co.-Exploration Corp. has entered joint venture agreements with food and beverage conglomerate San Miguel and Filipinas ...
Thursday, 30 July 09
NAMANE OF SOUTH AFRICA IN SUDAN COAL DEAL, BUSINESS REPORT SAYS
Namane of South Africa in Sudan Coal Deal, Business Report Says
Namane Resources Ltd. of South Africa signed a coal-supply agreement with the Nat ...
Wednesday, 29 July 09
RP COAL DEMAND TO SURGE BY 2014 - PHILIPPINES UPDATE
CEBU, Philippines - With the entry of new coal-fired power generation plants in the Philippines, the Department of Energy (DOE) projected an increas ...
Wednesday, 29 July 09
INDIA HUNGRY FOR OUR COKING COAL ASSETS
The Australian reported that, INDIA is about to embark on a program of rapid coal sector acquisitions in Australia as it looks to plug a huge annual ...
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- Mercuria Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- Georgia Ports Authority, United States
- Grasim Industreis Ltd - India
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Electricity Generating Authority of Thailand
- Holcim Trading Pte Ltd - Singapore
- London Commodity Brokers - England
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Attock Cement Pakistan Limited
- IHS Mccloskey Coal Group - USA
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- Sakthi Sugars Limited - India
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Sojitz Corporation - Japan
- Global Coal Blending Company Limited - Australia
- Bangladesh Power Developement Board
- Cement Manufacturers Association - India
- PetroVietnam Power Coal Import and Supply Company
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- South Luzon Thermal Energy Corporation
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- Videocon Industries ltd - India
- Minerals Council of Australia
- San Jose City I Power Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- Kaltim Prima Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Maheswari Brothers Coal Limited - India
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- Straits Asia Resources Limited - Singapore
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Interocean Group of Companies - India
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement - Thailand
- Sical Logistics Limited - India
- Cigading International Bulk Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Jindal Steel & Power Ltd - India
- OPG Power Generation Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- Meenaskhi Energy Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Latin American Coal - Colombia
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Port Waratah Coal Services - Australia
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- GMR Energy Limited - India
- Bhatia International Limited - India
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
- Planning Commission, India
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
- Parliament of New Zealand
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Goldman Sachs - Singapore
- Australian Coal Association
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- Bayan Resources Tbk. - Indonesia
- Kepco SPC Power Corporation, Philippines
- Ministry of Mines - Canada
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- SMC Global Power, Philippines
- Orica Australia Pty. Ltd.
- Bhushan Steel Limited - India
- Vizag Seaport Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Tamil Nadu electricity Board
- Kartika Selabumi Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Tata Chemicals Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- Wilmar Investment Holdings
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- The University of Queensland
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- Xindia Steels Limited - India
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- ASAPP Information Group - India
- GVK Power & Infra Limited - India
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Oldendorff Carriers - Singapore
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