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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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Tuesday, 21 July 09
FIRST QUARTER COAL MARKET AND EURACOAL'S OUTLOOK FOR THE FUTURE
Euracoal reports that for the first time in many years, the world market for hard coal fell by some 8 % during the first quarter 2009. This latest E ...
Monday, 20 July 09
CHINAS COAL DEMAND, OUTPUT TO PICK UP IN H2 - GROUP 2
Financial24 reported that, China's coal demand is expected to gradually pick up in the second half of the year, and coal output will likely grow fa ...
Monday, 20 July 09
ADANI POWER LAUNCHES IPO, AIMS HIGHER CAPACITY
Economic Times reported that, Adani Power Ltd, a power project development company, promoted by Adani Enterprise went for an initial public offering ...
Monday, 20 July 09
BANPU'S SECOND-HALF PROFIT MAY DROP ON COAL PRICES
Bloomberg Reported that, Banpu Pcl, Thailand’s biggest coal producer, expects profit to decline in the second half from the first six months a ...
Monday, 20 July 09
CHINA COAL PRODUCES 52.7 MLN TONNES OF COAL IN 1H, UP 5.4 PCT
China Mining reported that, China Coal Energy Co., the country's second largest coal producer, said Saturday that it produced 52.67 million tonnes ...
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- GN Power Mariveles Coal Plant, Philippines
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- Parliament of New Zealand
- Lanco Infratech Ltd - India
- Mercator Lines Limited - India
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Indogreen Group - Indonesia
- Bangladesh Power Developement Board
- Meenaskhi Energy Private Limited - India
- Economic Council, Georgia
- Chamber of Mines of South Africa
- Pendopo Energi Batubara - Indonesia
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- Tamil Nadu electricity Board
- GAC Shipping (India) Pvt Ltd
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- Vijayanagar Sugar Pvt Ltd - India
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Heidelberg Cement - Germany
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Standard Chartered Bank - UAE
- Petron Corporation, Philippines
- Marubeni Corporation - India
- PetroVietnam Power Coal Import and Supply Company
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- Merrill Lynch Commodities Europe
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Krishnapatnam Port Company Ltd. - India
- Jaiprakash Power Ventures ltd
- Oldendorff Carriers - Singapore
- Madhucon Powers Ltd - India
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Simpson Spence & Young - Indonesia
- Deloitte Consulting - India
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Chettinad Cement Corporation Ltd - India
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- Sarangani Energy Corporation, Philippines
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Agrawal Coal Company - India
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Rio Tinto Coal - Australia
- Australian Commodity Traders Exchange
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- Vedanta Resources Plc - India
- Antam Resourcindo - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Carbofer General Trading SA - India
- SMG Consultants - Indonesia
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- Posco Energy - South Korea
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Goldman Sachs - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- Independent Power Producers Association of India
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Xindia Steels Limited - India
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- New Zealand Coal & Carbon
- Altura Mining Limited, Indonesia
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Globalindo Alam Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Bhushan Steel Limited - India
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Bulk Trading Sa - Switzerland
- Therma Luzon, Inc, Philippines
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Barasentosa Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Ministry of Mines - Canada
- Ministry of Transport, Egypt
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
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