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