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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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Wednesday, 22 July 09
TAIPOWER RECEIVES 37 OFFERS IN TENDERS
State utility Taiwan Power has received offers for 37 panamax cargoes of bituminous and sub-bituminous coal in two tenders involving 12 panamax ship ...
Wednesday, 22 July 09
PRIME MINISTER APPROVAL SOUGHT TO HIKE COAL PRICES IN INDIA
PTI reported that decrying the low prices of the industrial fuel, the coal ministry will approach Dr Manmohan Singh PM of India next month for raisi ...
Tuesday, 21 July 09
BHATIA SAYS GETS ORDER FOR 800,000T COAL FROM KPCL
Reuters reported that, Indian traders Bhatia received on Tuesday a purchase order for 800,000 tonnes thermal coal at $63.00 C&F from Karnataka P ...
Tuesday, 21 July 09
NZ'S PIKE RIVER SAYS SELLS COAL AT $128 PER TONNE
Reuters reported that, New Zealand miner Pike River Coal said on Tuesday it had sold its premium hard coking coal at $128 a tonne for the curr ...
Tuesday, 21 July 09
NEWCASTLE COAL EXPORTS FALL 5%, SHIP QUEUE INCREASES
Bloomberg reported that, Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel, fell 5 per ...
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- SMC Global Power, Philippines
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- Salva Resources Pvt Ltd - India
- Mercuria Energy - Indonesia
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Rashtriya Ispat Nigam Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- ASAPP Information Group - India
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Carbofer General Trading SA - India
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- India Bulls Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Thiess Contractors Indonesia
- Goldman Sachs - Singapore
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
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- Trasteel International SA, Italy
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- GMR Energy Limited - India
- Economic Council, Georgia
- Indian Energy Exchange, India
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- Miang Besar Coal Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
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- Coalindo Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- PNOC Exploration Corporation - Philippines
- The University of Queensland
- Latin American Coal - Colombia
- VISA Power Limited - India
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Commonwealth Bank - Australia
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Gujarat Sidhee Cement - India
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- MS Steel International - UAE
- Videocon Industries ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
- Malabar Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- Planning Commission, India
- Deloitte Consulting - India
- Agrawal Coal Company - India
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- Iligan Light & Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Mines - Canada
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- European Bulk Services B.V. - Netherlands
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- Simpson Spence & Young - Indonesia
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- PowerSource Philippines DevCo
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- Intertek Mineral Services - Indonesia
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- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Aboitiz Power Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Riau Bara Harum - Indonesia
- Ministry of Finance - Indonesia
- Renaissance Capital - South Africa
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
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- Marubeni Corporation - India
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
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