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