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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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Monday, 27 July 09
ADANI POWER'S $625 MILLION IPO TO GENERATE HOT DEMAND
WSJ reported that, Adani Power, the electricity generating unit of India's Adani Enterprises Ltd., is set raise up to US$625 million in wha ...
Monday, 27 July 09
MIDDLE EAST COAL TO MOVE ON $1B EAST KALIMANTAN PROJECT
The Jakarta globe reported that, Middle East Coal reiterated on Monday that it would push ahead its $1 billion development program for East Kutai Re ...
Monday, 27 July 09
SHORT AND ONE YEAR PERIOD RATES FOR SUPRAMAX WAS FIRM AT AROUND US$ 18, 000 -18,500 PER DAY
COALspot.com (Singapore): The Supramax charter rates up sharply last week (ended 24th July 2009), especially India / Far East region said, Capt ...
Monday, 27 July 09
GMR ENERGY BUYS EMCO POWERGEN SUBSIDIARY
DNA India reported that, Thane-based transformer manufacturer Emco Ltd has sold its stake in unlisted power generation subsidiary Emco Energy to Ban ...
Sunday, 26 July 09
CESC PLANS 2000 MW POWER PLANT IN BIHAR
Jai Bihar reported that, RPG flagship company CESC Ltd on Friday unveiled its plan to set up a 2,000 MW power generation plant at Pirpainti near Bha ...
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- MS Steel International - UAE
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Heidelberg Cement - Germany
- Bhoruka Overseas - Indonesia
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- Star Paper Mills Limited - India
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- Bharathi Cement Corporation - India
- Bhushan Steel Limited - India
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Sarangani Energy Corporation, Philippines
- McConnell Dowell - Australia
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Ceylon Electricity Board - Sri Lanka
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
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- Altura Mining Limited, Indonesia
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Indika Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- Anglo American - United Kingdom
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- CNBM International Corporation - China
- Energy Development Corp, Philippines
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- VISA Power Limited - India
- Petron Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement PLC, Thailand
- SMC Global Power, Philippines
- PTC India Limited - India
- Bulk Trading Sa - Switzerland
- Indonesian Coal Mining Association
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Posco Energy - South Korea
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- Carbofer General Trading SA - India
- Thai Mozambique Logistica
- Indo Tambangraya Megah - Indonesia
- Therma Luzon, Inc, Philippines
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Australian Commodity Traders Exchange
- Indian Oil Corporation Limited
- Gujarat Mineral Development Corp Ltd - India
- Orica Mining Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- Singapore Mercantile Exchange
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Borneo Indobara - Indonesia
- Sakthi Sugars Limited - India
- The University of Queensland
- Karaikal Port Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
- Commonwealth Bank - Australia
- Semirara Mining and Power Corporation, Philippines
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Electricity Authority, New Zealand
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- Agrawal Coal Company - India
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Cement Manufacturers Association - India
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- Parry Sugars Refinery, India
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Orica Australia Pty. Ltd.
- Bayan Resources Tbk. - Indonesia
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