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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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Thursday, 23 July 09
COAL IMPORTS SURGE; EXPORTS DOWN IN H1
China Trade Information reported that, China’s coal imports surged by 126.3 percent year-on-year in the first half of 2009, reaching 48.3 mill ...
Thursday, 23 July 09
SRI LANKA CALLS FOR COAL SUPPLY BIDS
Daily Mirro reported that, In a move to install the country’s first coal power plant, Sri Lanka has invited bids to supply 2.4 million metric ...
Thursday, 23 July 09
POWER INVESTORS TURN BACKS ON VIETNAMESE COAL IMPORTERS
VietNamNet Bridge reported that, Investors of power plants always seek foreign coal sources to import themselves, believing they can come by it chea ...
Wednesday, 22 July 09
BERAU COAL DRAWS LOCAL, CHINESE BIDS - SOURCES
* Indonesian coal firm draws local, Chinese bids-sources
* Deal could value Berau at more than $1 billion-sources
Reuters reported that, China' ...
Wednesday, 22 July 09
ONE TENDERS FOR 114,000 MT FOR NOV-JAN
Moroccan state-owned power utility Office National de l’Electricité (ONE) has launched a tender for three handymax shipments of coal fo ...
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- The Treasury - Australian Government
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- London Commodity Brokers - England
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- SMG Consultants - Indonesia
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- Sree Jayajothi Cements Limited - India
- White Energy Company Limited
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
- MS Steel International - UAE
- Ministry of Transport, Egypt
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- Planning Commission, India
- Bhatia International Limited - India
- Coal and Oil Company - UAE
- SMC Global Power, Philippines
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- IEA Clean Coal Centre - UK
- Central Electricity Authority - India
- Heidelberg Cement - Germany
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Malabar Cements Ltd - India
- Orica Mining Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- LBH Netherlands Bv - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Anglo American - United Kingdom
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Coalindo Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bharathi Cement Corporation - India
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- Iligan Light & Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Indogreen Group - Indonesia
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Cement Manufacturers Association - India
- SN Aboitiz Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Baramulti Group, Indonesia
- Minerals Council of Australia
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Petrochimia International Co. Ltd.- Taiwan
- Wood Mackenzie - Singapore
- Tata Chemicals Ltd - India
- Eastern Energy - Thailand
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- Aditya Birla Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- CIMB Investment Bank - Malaysia
- Parliament of New Zealand
- Chamber of Mines of South Africa
- Deloitte Consulting - India
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- Directorate Of Revenue Intelligence - India
- Mintek Dendrill Indonesia
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Neyveli Lignite Corporation Ltd, - India
- Eastern Coal Council - USA
- Antam Resourcindo - Indonesia
- Electricity Authority, New Zealand
- IHS Mccloskey Coal Group - USA
- Meralco Power Generation, Philippines
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- Makarim & Taira - Indonesia
- Siam City Cement - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- Salva Resources Pvt Ltd - India
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kumho Petrochemical, South Korea
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Bangladesh Power Developement Board
- Indonesian Coal Mining Association
- Agrawal Coal Company - India
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- Edison Trading Spa - Italy
- Indian Energy Exchange, India
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