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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, 18 August 09
BANPU TO FOCUS ON CORE BUSINESS
Banpu, the country's leading energy firm, expects to conclude its four-year strategic plan next month, resulting in a strengthening of its core bus ...
Monday, 17 August 09
COAL EXPORTS CONTINUE DESPITE SHORTAGE
Vietnam News reported that, Viet Nam is exporting more coal despite a warning from experts that the country could face a shortage of this fossil fue ...
Monday, 17 August 09
S.KOREA JULY COAL IMPORTS UP TO 8.97 MLN T
* Imports of heating coal in July up 3.7 percent on year
* LNG imports in July fall for seventh straight month
Alibaba reorted that, South Kore ...
Monday, 17 August 09
COAL INDIA PLANS A PRICE HIKE OF 11%
With the state-run CIL mining 84% of the coal produced in the country, an 11% increase will push up inflation by around 0.16%, the company said
L ...
Monday, 17 August 09
BANPU SEES INDONESIAN MINE OUTPUT UP 10 PCT IN 2010
Reuters reported that, Thailand's top coal miner, Banpu, said on Monday it expected coal output from its Indonesian mines to rise 10 percent to abo ...
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- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
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- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- Uttam Galva Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Singapore Mercantile Exchange
- Gujarat Sidhee Cement - India
- Petrochimia International Co. Ltd.- Taiwan
- Mercuria Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- PTC India Limited - India
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- IHS Mccloskey Coal Group - USA
- Kumho Petrochemical, South Korea
- Agrawal Coal Company - India
- Minerals Council of Australia
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- The Treasury - Australian Government
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Sinarmas Energy and Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Coal and Oil Company - UAE
- Maharashtra Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- European Bulk Services B.V. - Netherlands
- Meralco Power Generation, Philippines
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- Miang Besar Coal Terminal - Indonesia
- Power Finance Corporation Ltd., India
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- Indonesian Coal Mining Association
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Aboitiz Power Corporation - Philippines
- Lanco Infratech Ltd - India
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- Rio Tinto Coal - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Bulk Trading Sa - Switzerland
- Directorate General of MIneral and Coal - Indonesia
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Ministry of Transport, Egypt
- Therma Luzon, Inc, Philippines
- Chamber of Mines of South Africa
- Sojitz Corporation - Japan
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Kideco Jaya Agung - Indonesia
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bhushan Steel Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Merrill Lynch Commodities Europe
- New Zealand Coal & Carbon
- Eastern Coal Council - USA
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- San Jose City I Power Corp, Philippines
- Metalloyd Limited - United Kingdom
- Simpson Spence & Young - Indonesia
- Makarim & Taira - Indonesia
- Parliament of New Zealand
- Central Java Power - Indonesia
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- Central Electricity Authority - India
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Vedanta Resources Plc - India
- South Luzon Thermal Energy Corporation
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Altura Mining Limited, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- Globalindo Alam Lestari - Indonesia
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- LBH Netherlands Bv - Netherlands
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