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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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Wednesday, 05 August 09
SMALLER DRY BULK CARRIERS TO FARE BETTER UNTIL THE END OF 2009 - SHIPPING
Marcor Shipping reported that, Smaller ship types are expected to outtake larger ones in dry bulk trade for the period until the end of the year. Th ...
Wednesday, 05 August 09
PEOPLE'S MINING SHOULD BE REGULATED UNDER RPP MINERBA
The Indonesian Institute of Science (LIPI) has called on the government to include a specific provision for people’s mining in the draft govern ...
Tuesday, 04 August 09
SRI LANKA IS LOOKING FOR 650,000 TON OF COAL NEXT YEAR FOR ITS FIRST 900 MW POWER PLANT.
COALspot.com ( Sri Lanka) : Lanka Coal Company Limited was issued a tender on 23 July 2009 to purchase 650,000 +/- 20% MT Bituminous Coal per a ...
Monday, 03 August 09
ONE YEAR CHARTER RATES FOR SUPRAMAX WAS AT AROUND USD 18,500 - VISTAAR SINGAPORE
COALspot.com (Singapore) : The freight market was flat this week with hardly any change in the BDI.The cape was up by about 4 pct and closed at 5,38 ...
Saturday, 01 August 09
APGENCO SAYS BOUGHT 500,000T MALAYSIAN COAL
The Malaysian Insider reported that, Indian state utility Andhra Pradesh Power Generation Corporation Ltd (Apgenco) has bought 500,000 tonnes of Mal ...
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- Bulk Trading Sa - Switzerland
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- Jaiprakash Power Ventures ltd
- Mercator Lines Limited - India
- Standard Chartered Bank - UAE
- PNOC Exploration Corporation - Philippines
- Parliament of New Zealand
- CNBM International Corporation - China
- Kartika Selabumi Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Karaikal Port Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Goldman Sachs - Singapore
- Sree Jayajothi Cements Limited - India
- Kideco Jaya Agung - Indonesia
- Orica Mining Services - Indonesia
- Australian Coal Association
- Posco Energy - South Korea
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- ASAPP Information Group - India
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- Minerals Council of Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Larsen & Toubro Limited - India
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- Indian Oil Corporation Limited
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- Orica Australia Pty. Ltd.
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- The Treasury - Australian Government
- Dalmia Cement Bharat India
- McConnell Dowell - Australia
- TeaM Sual Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Chamber of Mines of South Africa
- London Commodity Brokers - England
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Baramulti Group, Indonesia
- VISA Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Wood Mackenzie - Singapore
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Central Java Power - Indonesia
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- Bahari Cakrawala Sebuku - Indonesia
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Grasim Industreis Ltd - India
- Planning Commission, India
- Global Coal Blending Company Limited - Australia
- Carbofer General Trading SA - India
- Georgia Ports Authority, United States
- San Jose City I Power Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Aboitiz Power Corporation - Philippines
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- The State Trading Corporation of India Ltd
- Africa Commodities Group - South Africa
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
- Edison Trading Spa - Italy
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- LBH Netherlands Bv - Netherlands
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Kepco SPC Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Renaissance Capital - South Africa
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- Wilmar Investment Holdings
- GN Power Mariveles Coal Plant, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Mercuria Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Electricity Authority, New Zealand
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Petron Corporation, Philippines
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- Makarim & Taira - Indonesia
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- Ministry of Mines - Canada
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Banpu Public Company Limited - Thailand
- OPG Power Generation Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- South Luzon Thermal Energy Corporation
- Sindya Power Generating Company Private Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- Tata Chemicals Ltd - India
- Indonesian Coal Mining Association
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement - Thailand
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Star Paper Mills Limited - India
- Rio Tinto Coal - Australia
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Samtan Co., Ltd - South Korea
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- GMR Energy Limited - India
- Mintek Dendrill Indonesia
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