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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, 11 August 09
INDONESIA'S COAL EXPORTS TO INDIA WILL BE EXEMPTED FROM DUTIES STARTING JANUARY 1, 2013 - BERITA SORE
Berita sore reported that, ASEAN is scheduled to sign a long-awaited Free Trade Agreement (FTA) with India in Bangkok on Thursday aimed at boosting ...
Tuesday, 11 August 09
ZAMBIAN COAL BUYERS CONTINUE IMPORTING COAL FROM ZIMBABWE
Lusaka Times reported that, Coal mining companies have bemoaned the lack of market for their produce as prospective buyers continue importing the co ...
Monday, 10 August 09
NOMINAL HIKE IN COAL PRICES SOON - MEDIA
The hindu business reported that, a marginal hike in coal prices is in the offing. "I will be soon approaching the Prime Minister on the matter ...
Monday, 10 August 09
MANGALAM CEMENT PLACES ORDER FOR CAPTIVE POWER PLANT
Steel Guru reported that, Mangalam Cement Ltd has announced that the company on August 6th 2009 finalized order for Captive Thermal Power Plant of 1 ...
Monday, 10 August 09
VIET NAM COAL EXPORTS HIT 13.5 MILLION TONNES
VietNamNet Bridge reported that, Viet Nam exported more than 13.5 million tonnes of coal in the first seven months of this year, equal to the same p ...
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- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Siam City Cement - Thailand
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Marubeni Corporation - India
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- Sindya Power Generating Company Private Ltd
- Australian Coal Association
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- CNBM International Corporation - China
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- Grasim Industreis Ltd - India
- Vizag Seaport Private Limited - India
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- Eastern Coal Council - USA
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Globalindo Alam Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Wilmar Investment Holdings
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- SMG Consultants - Indonesia
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Bhushan Steel Limited - India
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kapuas Tunggal Persada - Indonesia
- Kumho Petrochemical, South Korea
- Bukit Makmur.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- San Jose City I Power Corp, Philippines
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- Port Waratah Coal Services - Australia
- Electricity Authority, New Zealand
- Ind-Barath Power Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- Eastern Energy - Thailand
- Heidelberg Cement - Germany
- ICICI Bank Limited - India
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Baramulti Group, Indonesia
- The Treasury - Australian Government
- Videocon Industries ltd - India
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- Deloitte Consulting - India
- Riau Bara Harum - Indonesia
- OPG Power Generation Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Indogreen Group - Indonesia
- Planning Commission, India
- Price Waterhouse Coopers - Russia
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Thai Mozambique Logistica
- Bhoruka Overseas - Indonesia
- Africa Commodities Group - South Africa
- Electricity Generating Authority of Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Chamber of Mines of South Africa
- Central Electricity Authority - India
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- Agrawal Coal Company - India
- Simpson Spence & Young - Indonesia
- Energy Link Ltd, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Metalloyd Limited - United Kingdom
- Xindia Steels Limited - India
- Orica Mining Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- Posco Energy - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Jaiprakash Power Ventures ltd
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- Semirara Mining and Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Petron Corporation, Philippines
- Cement Manufacturers Association - India
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
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