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