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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, 07 August 09
BALTIC DRY INDEX HAS WORST WEEK SINCE OCTOBER AS DEMAND SLOWS
Bloomberg reported that, The Baltic Dry Index, a measure of shipping costs for commodities, had its worst week since October as Chinese demand for s ...
Friday, 07 August 09
COAL-PRICE FORECAST RAISED AT MERRILL ON CHINA, INDIA DEMAND
Bloomberg reported that, Bank of America Corp.’s Merrill Lynch & Co. unit increased its price forecast for Asian power-station coal becaus ...
Friday, 07 August 09
CHINESE DEMAND FOR FOREIGN COAL SOARS
Mining Weekly reported that, Chinese coal imports rocketed by 126,3%, year-on-year, in the first half of this year, the country’s customs auth ...
Thursday, 06 August 09
RICHARDS BAY COAL SHIPMENTS FELL 3% ON YEAR IN JULY
Bloomberg reported that, Richards Bay Coal Terminal, Africa’s largest coal-export facility, exported 3 percent less of the fuel in July than i ...
Thursday, 06 August 09
NTPC LOOKS TO BYPASS STATE TRADING FIRMS ON COAL IMPORT
A reduced coal import bill for NTPC could lead to lower power tariffs
Live mint.com reported that, India’s largest power generation utility ...
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- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Rio Tinto Coal - Australia
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- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- The University of Queensland
- Planning Commission, India
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Carbofer General Trading SA - India
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Mineral Development Corp Ltd - India
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- VISA Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Goldman Sachs - Singapore
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- Globalindo Alam Lestari - Indonesia
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Antam Resourcindo - Indonesia
- Central Java Power - Indonesia
- Bhushan Steel Limited - India
- Straits Asia Resources Limited - Singapore
- Australian Coal Association
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Baramulti Group, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
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- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Ministry of Transport, Egypt
- Independent Power Producers Association of India
- CNBM International Corporation - China
- Meenaskhi Energy Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Vedanta Resources Plc - India
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Romanian Commodities Exchange
- Kobexindo Tractors - Indoneisa
- PowerSource Philippines DevCo
- Semirara Mining and Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- Pendopo Energi Batubara - Indonesia
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Energy Development Corp, Philippines
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- Mjunction Services Limited - India
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- Sojitz Corporation - Japan
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Marubeni Corporation - India
- Kaltim Prima Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Deloitte Consulting - India
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indika Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Siam City Cement PLC, Thailand
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Tata Chemicals Ltd - India
- Merrill Lynch Commodities Europe
- ICICI Bank Limited - India
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- Aboitiz Power Corporation - Philippines
- Mercuria Energy - Indonesia
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- IHS Mccloskey Coal Group - USA
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- White Energy Company Limited
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- LBH Netherlands Bv - Netherlands
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- Gujarat Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Economic Council, Georgia
- Thai Mozambique Logistica
- Parliament of New Zealand
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- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Parry Sugars Refinery, India
- Africa Commodities Group - South Africa
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Manunggal Multi Energi - Indonesia
- Makarim & Taira - Indonesia
- Bhatia International Limited - India
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Barasentosa Lestari - Indonesia
- Minerals Council of Australia
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
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