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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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Sunday, 09 August 09
TNEB ENNORE PORT CALLS TO TRIPLE COAL OUTPUT
World Shipping News reported that, the Tamil Nadu Electricity Board (TNEB) has asked Ennore Port Ltd (EPL) to increase the port’s installed ca ...
Saturday, 08 August 09
TWO / THREE YEAR CHARTER RATES FOR SUPRAMAX IS AROUND US$ 15,000-16,000 PER DAY - CAPT. REDDY
COALspot.com (Singapore): The dry bulk market tumbled this week and the BDI dropped by almost 17% and closed at 2,772 points.
The cape and panam ...
Saturday, 08 August 09
SULTAN MINING SIGNS P8-BILLION, 10-YEAR COAL-SUPPLY CONTRACT WITH KEPCO POWER CORP.
COAL developer Sultan Mining and Energy Development Corp. (SMEDC) reported on Thursday that its subsidiary MG Mining and Energy Corp. signed an P8-b ...
Friday, 07 August 09
NEED TO HIKE DOMESTIC PRICES - COAL INDIA
WSJ reported that, The chairman of Coal India Ltd., the country's biggest coal producer, Friday said there was a need to hike domestic coal prices ...
Friday, 07 August 09
INDONESIA COAL NEWS UPDATES
PTBA to Produce 13 Million Tons
President Director of Tambang Batubara Bukit Asam (PTBA), Sukrisno has estimated coal production of the company th ...
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- The Treasury - Australian Government
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Sindya Power Generating Company Private Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Sakthi Sugars Limited - India
- Cigading International Bulk Terminal - Indonesia
- Barasentosa Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Vedanta Resources Plc - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- PTC India Limited - India
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- SMG Consultants - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- Bhatia International Limited - India
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Indonesian Coal Mining Association
- Bulk Trading Sa - Switzerland
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- GN Power Mariveles Coal Plant, Philippines
- Commonwealth Bank - Australia
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- Bayan Resources Tbk. - Indonesia
- San Jose City I Power Corp, Philippines
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Manunggal Multi Energi - Indonesia
- IEA Clean Coal Centre - UK
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- Samtan Co., Ltd - South Korea
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- Baramulti Group, Indonesia
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- Formosa Plastics Group - Taiwan
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Chamber of Mines of South Africa
- Rio Tinto Coal - Australia
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- Merrill Lynch Commodities Europe
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Economic Council, Georgia
- GMR Energy Limited - India
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Energy Development Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- Indian Oil Corporation Limited
- South Luzon Thermal Energy Corporation
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- SMC Global Power, Philippines
- Jindal Steel & Power Ltd - India
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- Leighton Contractors Pty Ltd - Australia
- ICICI Bank Limited - India
- Indo Tambangraya Megah - Indonesia
- VISA Power Limited - India
- Global Business Power Corporation, Philippines
- Carbofer General Trading SA - India
- Straits Asia Resources Limited - Singapore
- Ind-Barath Power Infra Limited - India
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Goldman Sachs - Singapore
- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Indogreen Group - Indonesia
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- Borneo Indobara - Indonesia
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Planning Commission, India
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