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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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Saturday, 25 July 09
HUANENG EYES MAJORITY STAKE IN PT BERAU COAL
CCTV reported that, China's largest publicly traded power company has submitted a bid for controlling stake in Indonesia's fifth largest coal mine ...
Saturday, 25 July 09
ADANI POWER TO IMPORT COAL FOR MUNDRA PLANT
BL reported that more than 50% of the coal requirement for Adani Power’s 4,620 MW Mundra plant will have to be imported from Indonesia though ...
Friday, 24 July 09
INDONESIAN COAL NEWS - UPDATE
Income from tax slow
Since the economic crisis in October 2008 until now, tax from the general mining sector is slow. According to the Director Gene ...
Friday, 24 July 09
S.AFRICA JAN-JUNE EXPORTS TO ASIA AROUND 1.4 MLN T
* China takes 140-150,000 tonnes
* S.Korea imports zero
* Hong Kong utilites buy S.African coal
South African coal exports to Asia excluding India a ...
Friday, 24 July 09
BIG ADARO SHAREHOLDERS CREATE HOLDING COMPANY
The nation’s second-largest coal producer, PT Adaro Energy, said on Thursday that five key shareholders had merged their holdings in the compan ...
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- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- Savvy Resources Ltd - HongKong
- Vijayanagar Sugar Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- Cement Manufacturers Association - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- Kapuas Tunggal Persada - Indonesia
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Lanco Infratech Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- Borneo Indobara - Indonesia
- Interocean Group of Companies - India
- Global Green Power PLC Corporation, Philippines
- Australian Coal Association
- San Jose City I Power Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- Medco Energi Mining Internasional
- Pipit Mutiara Jaya. PT, Indonesia
- ASAPP Information Group - India
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Central Electricity Authority - India
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Standard Chartered Bank - UAE
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Energy Link Ltd, New Zealand
- Semirara Mining and Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- India Bulls Power Limited - India
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- Sakthi Sugars Limited - India
- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Malabar Cements Ltd - India
- Sical Logistics Limited - India
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- London Commodity Brokers - England
- SMC Global Power, Philippines
- White Energy Company Limited
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Antam Resourcindo - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Meralco Power Generation, Philippines
- PowerSource Philippines DevCo
- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- MS Steel International - UAE
- CNBM International Corporation - China
- Siam City Cement - Thailand
- Aboitiz Power Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Indian Oil Corporation Limited
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- IEA Clean Coal Centre - UK
- Karaikal Port Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- Essar Steel Hazira Ltd - India
- Bhoruka Overseas - Indonesia
- Global Business Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- Baramulti Group, Indonesia
- McConnell Dowell - Australia
- Central Java Power - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Petron Corporation, Philippines
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- Ministry of Mines - Canada
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Billiton Holdings Pty Ltd - Australia
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Minerals Council of Australia
- PTC India Limited - India
- Indo Tambangraya Megah - Indonesia
- Attock Cement Pakistan Limited
- GN Power Mariveles Coal Plant, Philippines
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
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