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