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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, 23 July 09
COAL IMPORTS SURGE; EXPORTS DOWN IN H1
China Trade Information reported that, China’s coal imports surged by 126.3 percent year-on-year in the first half of 2009, reaching 48.3 mill ...
Thursday, 23 July 09
SRI LANKA CALLS FOR COAL SUPPLY BIDS
Daily Mirro reported that, In a move to install the country’s first coal power plant, Sri Lanka has invited bids to supply 2.4 million metric ...
Thursday, 23 July 09
POWER INVESTORS TURN BACKS ON VIETNAMESE COAL IMPORTERS
VietNamNet Bridge reported that, Investors of power plants always seek foreign coal sources to import themselves, believing they can come by it chea ...
Wednesday, 22 July 09
BERAU COAL DRAWS LOCAL, CHINESE BIDS - SOURCES
* Indonesian coal firm draws local, Chinese bids-sources
* Deal could value Berau at more than $1 billion-sources
Reuters reported that, China' ...
Wednesday, 22 July 09
ONE TENDERS FOR 114,000 MT FOR NOV-JAN
Moroccan state-owned power utility Office National de l’Electricité (ONE) has launched a tender for three handymax shipments of coal fo ...
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- Electricity Authority, New Zealand
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- Bangladesh Power Developement Board
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Sakthi Sugars Limited - India
- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Karaikal Port Pvt Ltd - India
- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- White Energy Company Limited
- Eastern Energy - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Krishnapatnam Port Company Ltd. - India
- PNOC Exploration Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- Bharathi Cement Corporation - India
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- PowerSource Philippines DevCo
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- Wilmar Investment Holdings
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- Sree Jayajothi Cements Limited - India
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- TeaM Sual Corporation - Philippines
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhatia International Limited - India
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- Posco Energy - South Korea
- Deloitte Consulting - India
- London Commodity Brokers - England
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Videocon Industries ltd - India
- Formosa Plastics Group - Taiwan
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- Georgia Ports Authority, United States
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Global Coal Blending Company Limited - Australia
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- TNB Fuel Sdn Bhd - Malaysia
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Coal and Oil Company - UAE
- Thai Mozambique Logistica
- ASAPP Information Group - India
- Marubeni Corporation - India
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- Lanco Infratech Ltd - India
- CNBM International Corporation - China
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- Cement Manufacturers Association - India
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kohat Cement Company Ltd. - Pakistan
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- The University of Queensland
- Indian Energy Exchange, India
- South Luzon Thermal Energy Corporation
- Siam City Cement - Thailand
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- Mintek Dendrill Indonesia
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Malabar Cements Ltd - India
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- Central Java Power - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Dalmia Cement Bharat India
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Antam Resourcindo - Indonesia
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