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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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Wednesday, 22 July 09
TAIPOWER RECEIVES 37 OFFERS IN TENDERS
State utility Taiwan Power has received offers for 37 panamax cargoes of bituminous and sub-bituminous coal in two tenders involving 12 panamax ship ...
Wednesday, 22 July 09
PRIME MINISTER APPROVAL SOUGHT TO HIKE COAL PRICES IN INDIA
PTI reported that decrying the low prices of the industrial fuel, the coal ministry will approach Dr Manmohan Singh PM of India next month for raisi ...
Tuesday, 21 July 09
BHATIA SAYS GETS ORDER FOR 800,000T COAL FROM KPCL
Reuters reported that, Indian traders Bhatia received on Tuesday a purchase order for 800,000 tonnes thermal coal at $63.00 C&F from Karnataka P ...
Tuesday, 21 July 09
NZ'S PIKE RIVER SAYS SELLS COAL AT $128 PER TONNE
Reuters reported that, New Zealand miner Pike River Coal said on Tuesday it had sold its premium hard coking coal at $128 a tonne for the curr ...
Tuesday, 21 July 09
NEWCASTLE COAL EXPORTS FALL 5%, SHIP QUEUE INCREASES
Bloomberg reported that, Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel, fell 5 per ...
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- Global Coal Blending Company Limited - Australia
- Essar Steel Hazira Ltd - India
- The Treasury - Australian Government
- Trasteel International SA, Italy
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- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
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- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Leighton Contractors Pty Ltd - Australia
- McConnell Dowell - Australia
- Toyota Tsusho Corporation, Japan
- Marubeni Corporation - India
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Indonesian Coal Mining Association
- Tata Chemicals Ltd - India
- Directorate Of Revenue Intelligence - India
- Cigading International Bulk Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Straits Asia Resources Limited - Singapore
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
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- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- Dalmia Cement Bharat India
- Rio Tinto Coal - Australia
- Oldendorff Carriers - Singapore
- Sree Jayajothi Cements Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- Lanco Infratech Ltd - India
- Indian Oil Corporation Limited
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- GMR Energy Limited - India
- India Bulls Power Limited - India
- Maheswari Brothers Coal Limited - India
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- Bukit Baiduri Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sindya Power Generating Company Private Ltd
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Kepco SPC Power Corporation, Philippines
- Eastern Coal Council - USA
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Sojitz Corporation - Japan
- Tamil Nadu electricity Board
- Bhushan Steel Limited - India
- Parliament of New Zealand
- Grasim Industreis Ltd - India
- LBH Netherlands Bv - Netherlands
- Uttam Galva Steels Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- The University of Queensland
- Videocon Industries ltd - India
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement PLC, Thailand
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Petrochimia International Co. Ltd.- Taiwan
- Indika Energy - Indonesia
- Parry Sugars Refinery, India
- Kohat Cement Company Ltd. - Pakistan
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- Offshore Bulk Terminal Pte Ltd, Singapore
- GN Power Mariveles Coal Plant, Philippines
- Sical Logistics Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Renaissance Capital - South Africa
- OPG Power Generation Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Coalindo Energy - Indonesia
- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Baramulti Group, Indonesia
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Indogreen Group - Indonesia
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Chamber of Mines of South Africa
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- Eastern Energy - Thailand
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- Power Finance Corporation Ltd., India
- Chettinad Cement Corporation Ltd - India
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- Metalloyd Limited - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Carbofer General Trading SA - India
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- PowerSource Philippines DevCo
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
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