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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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Thursday, 16 July 09
JAPAN'S J - POWER STARTS OPS AT NEW 600 MW COAL UNIT
Reuters, a worlds leading news agency reported that, Electric Power Development Co (J-Power) said on Thursday it started commercial operations at it ...
Thursday, 16 July 09
DELIVERY OF COAL MINE EXPLORATION THROUGH NEWCASTLE PORT ROSE 11 PERCENT
July 16th, 2009 Newcastle is a port in Australia that provides services in the delivery of coal from Australia to other countries. Newcastle port ha ...
Thursday, 16 July 09
CIL KEEN ON JOINT VENTURES
* Targets to raise production by 10 m tonnes by 2012
* Plans to tap reserves of abandoned mines
The Hindu, an Indian news paper reported that, t ...
Wednesday, 15 July 09
COAL INDIA INVITES EOI FOR COAL MINING IN FOREIGN COUNTRIES
Economict Tmes reported that, Coal India, a leading PSU with a status of Navratna, today, invited Expression of Interest for selection of strategic ...
Wednesday, 15 July 09
BANGLADESH TO IMPORT COAL FROM INDIA FOR 1 MORE YR
Bangladesh has decided to import coal from neighbour India for another year to save foreign exchange and time, a commerce ministry official said on ...
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- Kohat Cement Company Ltd. - Pakistan
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- VISA Power Limited - India
- European Bulk Services B.V. - Netherlands
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Kepco SPC Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- CNBM International Corporation - China
- Tata Chemicals Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- Riau Bara Harum - Indonesia
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Neyveli Lignite Corporation Ltd, - India
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- The University of Queensland
- Mercator Lines Limited - India
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- MS Steel International - UAE
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Indonesian Coal Mining Association
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- Indogreen Group - Indonesia
- Toyota Tsusho Corporation, Japan
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Marubeni Corporation - India
- Edison Trading Spa - Italy
- Metalloyd Limited - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Maheswari Brothers Coal Limited - India
- Parliament of New Zealand
- Bhatia International Limited - India
- Rashtriya Ispat Nigam Limited - India
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- Agrawal Coal Company - India
- ICICI Bank Limited - India
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Price Waterhouse Coopers - Russia
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- TNB Fuel Sdn Bhd - Malaysia
- GVK Power & Infra Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Power Finance Corporation Ltd., India
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- Australian Coal Association
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- PNOC Exploration Corporation - Philippines
- The State Trading Corporation of India Ltd
- Singapore Mercantile Exchange
- Georgia Ports Authority, United States
- Ind-Barath Power Infra Limited - India
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Central Java Power - Indonesia
- London Commodity Brokers - England
- Straits Asia Resources Limited - Singapore
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercuria Energy - Indonesia
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- Jaiprakash Power Ventures ltd
- Borneo Indobara - Indonesia
- Xindia Steels Limited - India
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- SN Aboitiz Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Gujarat Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Goldman Sachs - Singapore
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- Banpu Public Company Limited - Thailand
- Petron Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- GMR Energy Limited - India
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- Larsen & Toubro Limited - India
- Bayan Resources Tbk. - Indonesia
- PTC India Limited - India
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
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