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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, 10 August 09
S.KOREA KOSPO ISSUES SPOT, TERM COAL TENDERS
Korea Southern Power Co Ltd (KOSPO) is seeking 1.5 million tonnes of steam coal per year for delivery from October 2009 through September 2012 via a ...
Monday, 10 August 09
POLICY HURDLES DELAY NALCO'S U$$ 4.166 BILLION OVERSEAS PROJECTS
National Aluminium Company Ltd's (NALCO) greenfield projects in overseas markets like Indonesia and Iran are in limbo because of political
...
Monday, 10 August 09
SAIL, TATA STEEL TO REDUCE COAL IMPORTS BY PARADIP PORT
World Shipping News reported that, Steel Authority of India Ltd (SAIL) and Tata Steel have scaled down coal imports through Paradip Port, hit by pre ...
Monday, 10 August 09
NTPC LIKELY TO SET UP POWER PLANTS IN NIGERIA AND SRILANKA
Economic time reported that, National Thermal Power Corporation Limited (NTPC), country's largest power utility, is likely to set up power plants i ...
Monday, 10 August 09
VINACOMIN TO SELL COAL AT MARKET PRICES TO DOMESTIC USERS
VNBusinessNews.com - Reuters reported that Vietnamese government has agreed to let coal monopoly Vinacomin sell coal at market oriented prices to do ...
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- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- Kideco Jaya Agung - Indonesia
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Medco Energi Mining Internasional
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Karaikal Port Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Central Electricity Authority - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thai Mozambique Logistica
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- GN Power Mariveles Coal Plant, Philippines
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- Riau Bara Harum - Indonesia
- Coal and Oil Company - UAE
- Leighton Contractors Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Energy Link Ltd, New Zealand
- Indo Tambangraya Megah - Indonesia
- Australian Coal Association
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- Timah Investasi Mineral - Indoneisa
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Krishnapatnam Port Company Ltd. - India
- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- Electricity Generating Authority of Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- Rio Tinto Coal - Australia
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- The University of Queensland
- Global Business Power Corporation, Philippines
- Anglo American - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Aditya Birla Group - India
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Port Waratah Coal Services - Australia
- Tamil Nadu electricity Board
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- Coalindo Energy - Indonesia
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- Ministry of Finance - Indonesia
- Africa Commodities Group - South Africa
- Agrawal Coal Company - India
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Videocon Industries ltd - India
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Meenaskhi Energy Private Limited - India
- MS Steel International - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- Therma Luzon, Inc, Philippines
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- Indian Energy Exchange, India
- India Bulls Power Limited - India
- Global Coal Blending Company Limited - Australia
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- Commonwealth Bank - Australia
- Altura Mining Limited, Indonesia
- Bhoruka Overseas - Indonesia
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- Mintek Dendrill Indonesia
- Minerals Council of Australia
- Uttam Galva Steels Limited - India
- Vizag Seaport Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Trasteel International SA, Italy
- Romanian Commodities Exchange
- Meralco Power Generation, Philippines
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
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