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Wednesday, 12 October 16
INDIAN STEELMAKERS' DELEVERAGING AT RISK ON COKING COAL PRICE JUMP - FITCH
 The sharp increase in coking coal prices since August 2016 could squeeze Indian steelmakers' profitability and threaten their deleveraging, Fitch Ratings says.
The risk will increase if high coking coal prices persist and domestic steel demand growth remains weak. Leverage for producers such as Tata Steel Limited (BB/Rating Watch Evolving) and JSW Steel Ltd (BB/Negative) jumped in the financial year ending March 2016 (FY16), mainly due to poor profitability, and sustained pressure on margins would hamper the deleveraging process.
Prices for hard coking coal for export by Australia as of 30 September 2016 were 125% (USD100/tonne) higher than the average in the quarter ended June 2016 (1QFY17), according to data from The Steel Index. Prices rallied following China's decision to limit coal mines' operating days to 276 a year, from 330 before, to restructure the industry and improve its profitability. Others issues such as flooding in China's Shanxi province, which reduced supply, and a number of unplanned mine outages in Australia also supported the price rise.
The increase in raw material costs for Indian steel producers could shrink margins, if the cost rise is not passed on to consumers. For example, we estimate that a USD50/tonne increase in Tata Steel's coking coal cost in 1QFY17 would have reduced consolidated EBITDA by around 35%, if all else stayed the same. Similarly, JSW Steel's 1QFY17 consolidated EBITDA would have fallen by around 25%. The impact of higher coal costs would be offset if we assume price realisations for the two companies were 5%-10% higher.
However, the ability of steelmakers in India to raise prices to counter any sustained cost increase is likely to be constrained if weak domestic demand growth persists amid increased capacity. Domestic consumption in April-September 2016 rose by just 2.5% yoy, compared with 5.9% in FY16. Meanwhile, producers, including Tata Steel and JSW Steel, aim to increase sales volume after recent capacity expansions.
The full impact of the recent jump in coking coal prices on steelmakers will be felt from the later part of 3QFY17, as volumes are mostly traded on a contractual basis and priced using monthly or quarterly averages, and companies generally keep two to three months' worth of inventories. JSW Steel relies solely on imported coking coal and is therefore exposed to the cost rises. Tata Steel's Indian operations are less susceptible to the rise in coking coal prices as its own production caters to roughly 45% of its requirements, but its overseas units are at higher risk as they rely on imports.
While short-term supply disruptions are being resolved, it is yet unclear how China's policy on coal will evolve. Steel makers in China have recently requested the government to allow higher coal output to alleviate cost pressures. However, coking coal prices could remain high in the absence of a relaxation in operating guidelines for mines. Fitch raised its mid-cycle price assumption for hard coking coal by around 10% to USD110/tonne for the long term in August 2016.
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Thursday, 03 November 16
THE INDEX BASED COAL SALES & PURCHASE STRATEGY MAKES MORE EFFICIENT, SAYS 55.17% END-USERS
Considering the current coal market condition, the Index based coal sales & purchase strategy make more efficient was deemed the winner by 57.0 ...
Thursday, 03 November 16
CAPESIZE: BRAZIL/CHINA RATES MOVED TO THE $11 PMT LEVEL; WEST AUSTRALIA/CHINA ROUTE MOVED UP CLOSE TO MID $5 PMT LEVEL - FEARNLEYS
Supramax
In the Atlantic we see a bit more activity than in the eastern hemisphere, says Fearnleys in its latest weekly report. Fhauls via Black ...
Wednesday, 02 November 16
SHIPPING MARKET INSIGHT
A week before the U.S. presidential election, everyone is eager to see the socio-political effects that the result of these elections will have. As ...
Wednesday, 02 November 16
SHIP OPERATING COSTS ARE EXPECTED TO RISE IN BOTH 2016 AND 2017 - MOORE STEPHENS
Vessel operating costs are expected to rise in both 2016 and 2017. Repairs and maintenance and spares are the cost categories which are likely to i ...
Tuesday, 01 November 16
PANAMAX : A FAIR AMOUNT OF SIDEWAYS SHIPPING IN RATES - ALLIED SHIPPING
Capesize
A very sluggish start to the week, with rates dropping considerably as all optimism seems to have evaporated over the weekend. According ...
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- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Timah Investasi Mineral - Indoneisa
- Edison Trading Spa - Italy
- Parliament of New Zealand
- Meralco Power Generation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Rio Tinto Coal - Australia
- Romanian Commodities Exchange
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- Central Electricity Authority - India
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- Commonwealth Bank - Australia
- Semirara Mining and Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Karaikal Port Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Cement Manufacturers Association - India
- Independent Power Producers Association of India
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Minerals Council of Australia
- New Zealand Coal & Carbon
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- Siam City Cement PLC, Thailand
- LBH Netherlands Bv - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kalimantan Lumbung Energi - Indonesia
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Deloitte Consulting - India
- IHS Mccloskey Coal Group - USA
- ASAPP Information Group - India
- Rashtriya Ispat Nigam Limited - India
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- Lanco Infratech Ltd - India
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- Merrill Lynch Commodities Europe
- Globalindo Alam Lestari - Indonesia
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- Bhushan Steel Limited - India
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sical Logistics Limited - India
- Planning Commission, India
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Global Business Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Kepco SPC Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- European Bulk Services B.V. - Netherlands
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- Asmin Koalindo Tuhup - Indonesia
- SN Aboitiz Power Inc, Philippines
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Pendopo Energi Batubara - Indonesia
- Carbofer General Trading SA - India
- Georgia Ports Authority, United States
- PTC India Limited - India
- Mercator Lines Limited - India
- Kumho Petrochemical, South Korea
- Iligan Light & Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- GVK Power & Infra Limited - India
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Indika Energy - Indonesia
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
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