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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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Monday, 17 August 09
COAL IMPORTS SURGE IN H1
China is one of the world's leading coal producers. But even so, imports of coal have surged in the first half of the year, hitting a record in Jun ...
Monday, 17 August 09
CHINESE COAL PURCHASE COULD START A TREND
ABC Rural reported that, The takeover of a major Australian coal mining company by Chinese-owned Yanzhou has raised fears coal markets could be domi ...
Saturday, 15 August 09
TWO / THREE YEAR CHARTER RATES FOR SUPRAMAX IS AROUND US$ 15,000-16,000 PER DAY - VISTAAR SHIPPING
COALspot.com (Singapore): The dry bulk market continued to be soft in the beginning of the week, however towards to end of the week the BDI recovere ...
Friday, 14 August 09
ASIA GREEN TO SELL MORE COAL
I Stock Analyst reported that, Asia Green Energy Plc (AGE) aims to increase its coal sales by 20 percent to 1 million tonnes this year, given the gl ...
Friday, 14 August 09
INDONESIA COAL-PRICES FALL TO $74, INDIA EYES SEPT CARGOES
Reuters reported that, Prices of power-station coal from Australia fell to around $74 a tonne as demand eased, while Indian buyers started to look f ...
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- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Medco Energi Mining Internasional
- OPG Power Generation Pvt Ltd - India
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Semirara Mining Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Goldman Sachs - Singapore
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- Orica Mining Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bhushan Steel Limited - India
- Aditya Birla Group - India
- AsiaOL BioFuels Corp., Philippines
- CNBM International Corporation - China
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Jaiprakash Power Ventures ltd
- Central Java Power - Indonesia
- Madhucon Powers Ltd - India
- Attock Cement Pakistan Limited
- Merrill Lynch Commodities Europe
- Africa Commodities Group - South Africa
- Indian Energy Exchange, India
- Mercuria Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Petrochimia International Co. Ltd.- Taiwan
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Mercator Lines Limited - India
- Economic Council, Georgia
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- PTC India Limited - India
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- Trasteel International SA, Italy
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Rio Tinto Coal - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pendopo Energi Batubara - Indonesia
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Bhatia International Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Indika Energy - Indonesia
- Wood Mackenzie - Singapore
- Bharathi Cement Corporation - India
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- VISA Power Limited - India
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Australian Commodity Traders Exchange
- Australian Coal Association
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- Ministry of Finance - Indonesia
- Parry Sugars Refinery, India
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Tata Chemicals Ltd - India
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Jorong Barutama Greston.PT - Indonesia
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- Bhoruka Overseas - Indonesia
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Ind-Barath Power Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Minerals Council of Australia
- Eastern Coal Council - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- Sojitz Corporation - Japan
- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- Uttam Galva Steels Limited - India
- Energy Link Ltd, New Zealand
- Therma Luzon, Inc, Philippines
- Heidelberg Cement - Germany
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- LBH Netherlands Bv - Netherlands
- Deloitte Consulting - India
- Planning Commission, India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- White Energy Company Limited
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- McConnell Dowell - Australia
- Oldendorff Carriers - Singapore
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indian Oil Corporation Limited
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Cigading International Bulk Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Timah Investasi Mineral - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Sical Logistics Limited - India
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- Gujarat Sidhee Cement - India
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Siam City Cement - Thailand
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