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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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Friday, 24 July 09
INDIA TAKES 9 MILLION TONNES S. AFRICAN COAL JAN - JUNE
Reuters reported that, India accounted for nearly 9 million tonnes of South Africa's January-June exports of around 28 million tonnes, industry sour ...
Thursday, 23 July 09
KOMIPO LAUNCHES TWO COAL TENDERS
Korea Midland Power on Wednesday launched two tenders to procure bituminous or semi-anthracite coal for August to September delivery. Bids close on J ...
Thursday, 23 July 09
GUANGDONG BUYERS SET TO IMPORT 2.3 MILLION MT FROM VIETNAM - MEDIA
Several coal-consuming companies in China’s Guangdong Province, headed by Guangdong Yudean Group (Guangdong Power Generation Group), have inke ...
Thursday, 23 July 09
KEPCO BUYS 1.5% STAKE IN ADARO ENERGY FOR US$ 56.5M
WSJ reported that, state-run utility Korea Electric Power Corp., or Kepco, Thursday said it has acquired a 1.5% stake in Indonesian coal miner, PT A ...
Thursday, 23 July 09
INDONESIA COAL-PRICES CLIMB TO $80, INDIAN DEMAND SLOWS
Reuters reported that, prices of power-station coal in Australia, a benchmark for Asia, jumped to nearly $80 a tonne this week, while Indonesi ...
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- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- Kalimantan Lumbung Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Madhucon Powers Ltd - India
- Central Electricity Authority - India
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- Straits Asia Resources Limited - Singapore
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Global Business Power Corporation, Philippines
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Electricity Authority, New Zealand
- Eastern Coal Council - USA
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
- Xindia Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Uttam Galva Steels Limited - India
- Chamber of Mines of South Africa
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- Indian Oil Corporation Limited
- Vedanta Resources Plc - India
- Wilmar Investment Holdings
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- Krishnapatnam Port Company Ltd. - India
- White Energy Company Limited
- Petron Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Miang Besar Coal Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Orica Mining Services - Indonesia
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Minerals Council of Australia
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Kepco SPC Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Simpson Spence & Young - Indonesia
- Parliament of New Zealand
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Baramulti Group, Indonesia
- Deloitte Consulting - India
- Videocon Industries ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- GN Power Mariveles Coal Plant, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- India Bulls Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- Sree Jayajothi Cements Limited - India
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- Sakthi Sugars Limited - India
- TeaM Sual Corporation - Philippines
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Indonesian Coal Mining Association
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- Ceylon Electricity Board - Sri Lanka
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- Carbofer General Trading SA - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
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