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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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Friday, 17 July 09
THE NEW LAW OF MINERAL AND COAL MINING NO 4/2009 CREATE CONDUCIVE CLIMATE OF INVESTMENT IN INDONESIA
COALspot.com (Indonesia): The new Law of Mineral and Coal Mining No 4/2009, which replaces the old mining law No. 11/1967 has been signed by the Pre ...
Friday, 17 July 09
INDIA COAL TRADERS MUST OWN POWER, MINES - C&O BOSS
· Coal traders need to diversify to grow
· Coastal Energen to build first merchant power plant
· Tamil Nadu to see st ...
Friday, 17 July 09
CHINA SHENHUA ENERGY'S COAL OUTPUT SWELLS 17.6% IN H1
China Knowledge reported that, China Shenhua Energy Co Ltd, which is engaged in the coal mining, power generation and transportation businesses, on ...
Thursday, 16 July 09
CHINA ISSUES SECOND BATCH OF '09 EXPORT QUOTAS
China has issued 25 million tonnes of coal export quotas for the second batch this year, the National Development and Reform Commission said Wednesd ...
Thursday, 16 July 09
NTPC TO ENGAGE BANKERS TO ACQUIRE OVERSEAS COAL MINES
The Hindu reported that, State-run power generation company NTPC said it would appoint merchant bankers next month for acquiring coal mines identifi ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Riau Bara Harum - Indonesia
- Xindia Steels Limited - India
- Aditya Birla Group - India
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- CIMB Investment Bank - Malaysia
- Wilmar Investment Holdings
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Gujarat Sidhee Cement - India
- Jorong Barutama Greston.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Agrawal Coal Company - India
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Dalmia Cement Bharat India
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- Singapore Mercantile Exchange
- Africa Commodities Group - South Africa
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Kaltim Prima Coal - Indonesia
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- Directorate Of Revenue Intelligence - India
- Parry Sugars Refinery, India
- Salva Resources Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- McConnell Dowell - Australia
- Marubeni Corporation - India
- India Bulls Power Limited - India
- PNOC Exploration Corporation - Philippines
- Makarim & Taira - Indonesia
- IHS Mccloskey Coal Group - USA
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mintek Dendrill Indonesia
- Toyota Tsusho Corporation, Japan
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Cigading International Bulk Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- Meralco Power Generation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Planning Commission, India
- Vizag Seaport Private Limited - India
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- Orica Mining Services - Indonesia
- Thai Mozambique Logistica
- SMG Consultants - Indonesia
- Larsen & Toubro Limited - India
- Semirara Mining Corp, Philippines
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Indika Energy - Indonesia
- The University of Queensland
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Uttam Galva Steels Limited - India
- Videocon Industries ltd - India
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- European Bulk Services B.V. - Netherlands
- Siam City Cement - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Commonwealth Bank - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mjunction Services Limited - India
- Kepco SPC Power Corporation, Philippines
- Goldman Sachs - Singapore
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- ICICI Bank Limited - India
- Semirara Mining and Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Georgia Ports Authority, United States
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Pendopo Energi Batubara - Indonesia
- Cement Manufacturers Association - India
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- White Energy Company Limited
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- Grasim Industreis Ltd - India
- Indian Energy Exchange, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
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