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