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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, 14 August 09
GUACOLDA STARTS THIRD COAL-FIRED UNIT
Macorship reported that, Chile’s Empresa Electrica Guacolda said that the third unit at its Guacolda coal-fired power plant began supplying po ...
Thursday, 13 August 09
RIO PREPARES COAL IPO AFTER FAILING TO FIND BUYER
Bloomberg reported that, Rio Tinto Group, the world’s third- largest mining company, is preparing an initial public offering for its U.S. ...
Thursday, 13 August 09
NOBLE'S PROFIT DOUBLES ON GLOUCESTER COAL ACQUISITION
Bloomberg reported that, Noble Group Ltd., a Hong Kong-based supplier of raw materials from soybeans to coal, said second- quarter profit more than ...
Thursday, 13 August 09
CHINA COAL-PRICES UNCHANGED, BUT LIKELY TO MOVE HIGHER
Alibaba reported that, Spot coal prices in China's top coal port Qinhuangdao were unchanged from a week earlier, but are still looking bullish in t ...
Thursday, 13 August 09
INDONESIA'S BERAU COAL SEES 2010 OUTPUT UP 16 PCT
Reuters reported that, Indonesia's fifth-largest coal miner, PT Berau Coal, expects 2010 production to be nearly 16 percent higher than this year, ...
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- Banpu Public Company Limited - Thailand
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- GAC Shipping (India) Pvt Ltd
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- Romanian Commodities Exchange
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- Lanco Infratech Ltd - India
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Electricity Generating Authority of Thailand
- Intertek Mineral Services - Indonesia
- Indonesian Coal Mining Association
- Minerals Council of Australia
- Planning Commission, India
- Tamil Nadu electricity Board
- Toyota Tsusho Corporation, Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Savvy Resources Ltd - HongKong
- Siam City Cement - Thailand
- Aditya Birla Group - India
- CNBM International Corporation - China
- IHS Mccloskey Coal Group - USA
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- Ind-Barath Power Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Riau Bara Harum - Indonesia
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- The Treasury - Australian Government
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Trasteel International SA, Italy
- Sakthi Sugars Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- SMC Global Power, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Baramulti Group, Indonesia
- MS Steel International - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jindal Steel & Power Ltd - India
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Sojitz Corporation - Japan
- Thai Mozambique Logistica
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Vedanta Resources Plc - India
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- Timah Investasi Mineral - Indoneisa
- Kideco Jaya Agung - Indonesia
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- White Energy Company Limited
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- Uttam Galva Steels Limited - India
- PTC India Limited - India
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- GMR Energy Limited - India
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- Bhatia International Limited - India
- Interocean Group of Companies - India
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Parry Sugars Refinery, India
- Iligan Light & Power Inc, Philippines
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- The University of Queensland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- Meralco Power Generation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- Bhushan Steel Limited - India
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Salva Resources Pvt Ltd - India
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Ambuja Cements Ltd - India
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Australian Coal Association
- Indian Oil Corporation Limited
- Barasentosa Lestari - Indonesia
- Petron Corporation, Philippines
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