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