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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, 13 August 09
JAYPEE GROUP. L&T INK RS 4,000-CRORE (US$ 824,818,084) DEAL
Second order bagged by L&T in the supercritical segment.
Jaiprakash Power Ventures Ltd (JPVL), promoted by the $7-billion Jaypee group, has s ...
Wednesday, 12 August 09
COAL INDIA TO IMPORT 4 MLN T 2009/10 - MEDIA
State-run Coal India Ltd plans to directly import 4 million tonnes of coal in the current fiscal year to March 2010, Chairman Partha Bhattacharyya s ...
Wednesday, 12 August 09
CHINA'S LARGEST COAL PRODUCER TO SET UP COAL RESERVES
China's National Development and Reform Commission has commissioned China Shenhua Energy Co., the nation's largest coal producer, to build 10 stor ...
Wednesday, 12 August 09
NALCO SMELTER CONSTRUCTION MAY FACE DELAY
The Jakarta Post reported that, India’s state-run National Aluminum Company (Nalco) may postpone the construction of an aluminum smelter in In ...
Wednesday, 12 August 09
COAL MINE PLAN SHOT DOWN OVER GREEN CONCERNS
The Times of India reported that, In a major setback to Adani Powers, the principal chief conservator of forests (PCCF) has rejected its proposal fo ...
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- Cement Manufacturers Association - India
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Sindya Power Generating Company Private Ltd
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Straits Asia Resources Limited - Singapore
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- Electricity Authority, New Zealand
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- Mercator Lines Limited - India
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- Larsen & Toubro Limited - India
- Therma Luzon, Inc, Philippines
- GVK Power & Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Maheswari Brothers Coal Limited - India
- Electricity Generating Authority of Thailand
- The University of Queensland
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Ministry of Transport, Egypt
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- Xindia Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- Gujarat Sidhee Cement - India
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Orica Australia Pty. Ltd.
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Australian Coal Association
- Makarim & Taira - Indonesia
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- Indo Tambangraya Megah - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- ASAPP Information Group - India
- Interocean Group of Companies - India
- Alfred C Toepfer International GmbH - Germany
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- Gujarat Mineral Development Corp Ltd - India
- Sree Jayajothi Cements Limited - India
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- TeaM Sual Corporation - Philippines
- Parry Sugars Refinery, India
- VISA Power Limited - India
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Savvy Resources Ltd - HongKong
- Latin American Coal - Colombia
- South Luzon Thermal Energy Corporation
- Kideco Jaya Agung - Indonesia
- Bangladesh Power Developement Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Orica Mining Services - Indonesia
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
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