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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, 28 July 09
SHENZHEN ENERGY INKS COAL PURCHASE CONTRACT WITH CHINA SHENHUA
China Knowledge reported that, Shenzhen Energy Group Co Ltd has signed a five-year contract with China Shenhua Energy Co Ltd, which is engaged in th ...
Tuesday, 28 July 09
BUKIT ASAM ENJOYS STRONG FIRST HALF
The Jakarta Post reported that, state coal miner PT Tambang Batubara Bukit Asam (PTBA) enjoyed a strong first half performance with six-month net pr ...
Tuesday, 28 July 09
NEWCASTLE LOADED 1.943 MILLION TONS OF COAL IN THE WEEK ENDED 27TH JULY 2009
COALspot.com (Singapore) : The volume exported from Australia’s Newcastle port in the week ended - 07:00 hours 27 July 2009 ...
Monday, 27 July 09
INDIA PAYING HIGHEST PRICE FOR S.AFRICA COAL - PRODUCERS
* Spread between South African and Pacific origin coal very wide
* Lack of European buying makes India indicator of value
Reuters reported that, ...
Monday, 27 July 09
TAIWAN'S FORMOSA EYES S.AFRICAN COAL FOR Q4: TRADE
Reuters reported that, Taiwan's Formosa Plastics Group is looking to buy two South African thermal coal cargoes for delivery in the fourth-quarter, ...
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- San Jose City I Power Corp, Philippines
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- IEA Clean Coal Centre - UK
- Indonesian Coal Mining Association
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Iligan Light & Power Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Mjunction Services Limited - India
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Bhoruka Overseas - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Goldman Sachs - Singapore
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Sojitz Corporation - Japan
- Larsen & Toubro Limited - India
- Coastal Gujarat Power Limited - India
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- CNBM International Corporation - China
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- Videocon Industries ltd - India
- Kartika Selabumi Mining - Indonesia
- Indian Oil Corporation Limited
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- Intertek Mineral Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- Bayan Resources Tbk. - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Altura Mining Limited, Indonesia
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- Meralco Power Generation, Philippines
- White Energy Company Limited
- Antam Resourcindo - Indonesia
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Economic Council, Georgia
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Chettinad Cement Corporation Ltd - India
- Romanian Commodities Exchange
- Barasentosa Lestari - Indonesia
- Indika Energy - Indonesia
- Mintek Dendrill Indonesia
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Toyota Tsusho Corporation, Japan
- Kohat Cement Company Ltd. - Pakistan
- Minerals Council of Australia
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Carbofer General Trading SA - India
- New Zealand Coal & Carbon
- Star Paper Mills Limited - India
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- Coal and Oil Company - UAE
- Globalindo Alam Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- Ceylon Electricity Board - Sri Lanka
- Bukit Asam (Persero) Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Link Ltd, New Zealand
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- International Coal Ventures Pvt Ltd - India
- The University of Queensland
- Jindal Steel & Power Ltd - India
- Port Waratah Coal Services - Australia
- Trasteel International SA, Italy
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Meenaskhi Energy Private Limited - India
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- The Treasury - Australian Government
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Eastern Coal Council - USA
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- ICICI Bank Limited - India
- Anglo American - United Kingdom
- Planning Commission, India
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Samtan Co., Ltd - South Korea
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Parry Sugars Refinery, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Xindia Steels Limited - India
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
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