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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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Saturday, 25 July 09
HUANENG EYES MAJORITY STAKE IN PT BERAU COAL
CCTV reported that, China's largest publicly traded power company has submitted a bid for controlling stake in Indonesia's fifth largest coal mine ...
Saturday, 25 July 09
ADANI POWER TO IMPORT COAL FOR MUNDRA PLANT
BL reported that more than 50% of the coal requirement for Adani Power’s 4,620 MW Mundra plant will have to be imported from Indonesia though ...
Friday, 24 July 09
INDONESIAN COAL NEWS - UPDATE
Income from tax slow
Since the economic crisis in October 2008 until now, tax from the general mining sector is slow. According to the Director Gene ...
Friday, 24 July 09
S.AFRICA JAN-JUNE EXPORTS TO ASIA AROUND 1.4 MLN T
* China takes 140-150,000 tonnes
* S.Korea imports zero
* Hong Kong utilites buy S.African coal
South African coal exports to Asia excluding India a ...
Friday, 24 July 09
BIG ADARO SHAREHOLDERS CREATE HOLDING COMPANY
The nation’s second-largest coal producer, PT Adaro Energy, said on Thursday that five key shareholders had merged their holdings in the compan ...
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- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- IEA Clean Coal Centre - UK
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- SMC Global Power, Philippines
- Rashtriya Ispat Nigam Limited - India
- Videocon Industries ltd - India
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Makarim & Taira - Indonesia
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Oldendorff Carriers - Singapore
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- Singapore Mercantile Exchange
- Goldman Sachs - Singapore
- Baramulti Group, Indonesia
- Parliament of New Zealand
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- Global Business Power Corporation, Philippines
- Posco Energy - South Korea
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- South Luzon Thermal Energy Corporation
- PTC India Limited - India
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- Ambuja Cements Ltd - India
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Interocean Group of Companies - India
- Bukit Baiduri Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Minerals Council of Australia
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- SMG Consultants - Indonesia
- Port Waratah Coal Services - Australia
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- GVK Power & Infra Limited - India
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- White Energy Company Limited
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- Ministry of Transport, Egypt
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Edison Trading Spa - Italy
- Price Waterhouse Coopers - Russia
- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- Central Java Power - Indonesia
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Cigading International Bulk Terminal - Indonesia
- Samtan Co., Ltd - South Korea
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Jorong Barutama Greston.PT - Indonesia
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- Coastal Gujarat Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Intertek Mineral Services - Indonesia
- Australian Coal Association
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Malabar Cements Ltd - India
- MS Steel International - UAE
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Indogreen Group - Indonesia
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Latin American Coal - Colombia
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Independent Power Producers Association of India
- Sical Logistics Limited - India
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Aditya Birla Group - India
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- The University of Queensland
- Chamber of Mines of South Africa
- Lanco Infratech Ltd - India
- India Bulls Power Limited - India
- Savvy Resources Ltd - HongKong
- Miang Besar Coal Terminal - Indonesia
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Madhucon Powers Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- Power Finance Corporation Ltd., India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Trasteel International SA, Italy
- Sakthi Sugars Limited - India
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- Xindia Steels Limited - India
- Banpu Public Company Limited - Thailand
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- TeaM Sual Corporation - Philippines
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
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