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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, 24 July 09
INDIA TAKES 9 MILLION TONNES S. AFRICAN COAL JAN - JUNE
Reuters reported that, India accounted for nearly 9 million tonnes of South Africa's January-June exports of around 28 million tonnes, industry sour ...
Thursday, 23 July 09
KOMIPO LAUNCHES TWO COAL TENDERS
Korea Midland Power on Wednesday launched two tenders to procure bituminous or semi-anthracite coal for August to September delivery. Bids close on J ...
Thursday, 23 July 09
GUANGDONG BUYERS SET TO IMPORT 2.3 MILLION MT FROM VIETNAM - MEDIA
Several coal-consuming companies in China’s Guangdong Province, headed by Guangdong Yudean Group (Guangdong Power Generation Group), have inke ...
Thursday, 23 July 09
KEPCO BUYS 1.5% STAKE IN ADARO ENERGY FOR US$ 56.5M
WSJ reported that, state-run utility Korea Electric Power Corp., or Kepco, Thursday said it has acquired a 1.5% stake in Indonesian coal miner, PT A ...
Thursday, 23 July 09
INDONESIA COAL-PRICES CLIMB TO $80, INDIAN DEMAND SLOWS
Reuters reported that, prices of power-station coal in Australia, a benchmark for Asia, jumped to nearly $80 a tonne this week, while Indonesi ...
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- Ministry of Transport, Egypt
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Sical Logistics Limited - India
- Karaikal Port Pvt Ltd - India
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Energy Link Ltd, New Zealand
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- Meenaskhi Energy Private Limited - India
- Sree Jayajothi Cements Limited - India
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Agrawal Coal Company - India
- Baramulti Group, Indonesia
- Toyota Tsusho Corporation, Japan
- The Treasury - Australian Government
- Aditya Birla Group - India
- Binh Thuan Hamico - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- Planning Commission, India
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- IEA Clean Coal Centre - UK
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Bukit Baiduri Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- Thai Mozambique Logistica
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- PowerSource Philippines DevCo
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- CNBM International Corporation - China
- TNB Fuel Sdn Bhd - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Posco Energy - South Korea
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Borneo Indobara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Simpson Spence & Young - Indonesia
- GVK Power & Infra Limited - India
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Madhucon Powers Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- PTC India Limited - India
- Chettinad Cement Corporation Ltd - India
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Parry Sugars Refinery, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- ICICI Bank Limited - India
- The University of Queensland
- OPG Power Generation Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- Australian Coal Association
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- Ceylon Electricity Board - Sri Lanka
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indian Energy Exchange, India
- Marubeni Corporation - India
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Jindal Steel & Power Ltd - India
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- Indian Oil Corporation Limited
- MS Steel International - UAE
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Savvy Resources Ltd - HongKong
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Dalmia Cement Bharat India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
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