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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, 27 July 09
ADANI POWER'S $625 MILLION IPO TO GENERATE HOT DEMAND
WSJ reported that, Adani Power, the electricity generating unit of India's Adani Enterprises Ltd., is set raise up to US$625 million in wha ...
Monday, 27 July 09
MIDDLE EAST COAL TO MOVE ON $1B EAST KALIMANTAN PROJECT
The Jakarta globe reported that, Middle East Coal reiterated on Monday that it would push ahead its $1 billion development program for East Kutai Re ...
Monday, 27 July 09
SHORT AND ONE YEAR PERIOD RATES FOR SUPRAMAX WAS FIRM AT AROUND US$ 18, 000 -18,500 PER DAY
COALspot.com (Singapore): The Supramax charter rates up sharply last week (ended 24th July 2009), especially India / Far East region said, Capt ...
Monday, 27 July 09
GMR ENERGY BUYS EMCO POWERGEN SUBSIDIARY
DNA India reported that, Thane-based transformer manufacturer Emco Ltd has sold its stake in unlisted power generation subsidiary Emco Energy to Ban ...
Sunday, 26 July 09
CESC PLANS 2000 MW POWER PLANT IN BIHAR
Jai Bihar reported that, RPG flagship company CESC Ltd on Friday unveiled its plan to set up a 2,000 MW power generation plant at Pirpainti near Bha ...
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- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Anglo American - United Kingdom
- Minerals Council of Australia
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Vizag Seaport Private Limited - India
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Wood Mackenzie - Singapore
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- IHS Mccloskey Coal Group - USA
- Thiess Contractors Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- South Luzon Thermal Energy Corporation
- Indo Tambangraya Megah - Indonesia
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- Karaikal Port Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Madhucon Powers Ltd - India
- Sical Logistics Limited - India
- Power Finance Corporation Ltd., India
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- Maharashtra Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Bhatia International Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Independent Power Producers Association of India
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Australian Coal Association
- Australian Commodity Traders Exchange
- Kartika Selabumi Mining - Indonesia
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Riau Bara Harum - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Dalmia Cement Bharat India
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- ICICI Bank Limited - India
- SN Aboitiz Power Inc, Philippines
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Lanco Infratech Ltd - India
- Mjunction Services Limited - India
- Gujarat Sidhee Cement - India
- Miang Besar Coal Terminal - Indonesia
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Parliament of New Zealand
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Bhushan Steel Limited - India
- Formosa Plastics Group - Taiwan
- VISA Power Limited - India
- IEA Clean Coal Centre - UK
- Sarangani Energy Corporation, Philippines
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Salva Resources Pvt Ltd - India
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Altura Mining Limited, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Indonesian Coal Mining Association
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- Energy Link Ltd, New Zealand
- Economic Council, Georgia
- Straits Asia Resources Limited - Singapore
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- Pipit Mutiara Jaya. PT, Indonesia
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