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