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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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Tuesday, 21 July 09
FIRST QUARTER COAL MARKET AND EURACOAL'S OUTLOOK FOR THE FUTURE
Euracoal reports that for the first time in many years, the world market for hard coal fell by some 8 % during the first quarter 2009. This latest E ...
Monday, 20 July 09
CHINAS COAL DEMAND, OUTPUT TO PICK UP IN H2 - GROUP 2
Financial24 reported that, China's coal demand is expected to gradually pick up in the second half of the year, and coal output will likely grow fa ...
Monday, 20 July 09
ADANI POWER LAUNCHES IPO, AIMS HIGHER CAPACITY
Economic Times reported that, Adani Power Ltd, a power project development company, promoted by Adani Enterprise went for an initial public offering ...
Monday, 20 July 09
BANPU'S SECOND-HALF PROFIT MAY DROP ON COAL PRICES
Bloomberg Reported that, Banpu Pcl, Thailand’s biggest coal producer, expects profit to decline in the second half from the first six months a ...
Monday, 20 July 09
CHINA COAL PRODUCES 52.7 MLN TONNES OF COAL IN 1H, UP 5.4 PCT
China Mining reported that, China Coal Energy Co., the country's second largest coal producer, said Saturday that it produced 52.67 million tonnes ...
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- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Sidhee Cement - India
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Lanco Infratech Ltd - India
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Anglo American - United Kingdom
- Baramulti Group, Indonesia
- PNOC Exploration Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- SN Aboitiz Power Inc, Philippines
- Interocean Group of Companies - India
- The University of Queensland
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- Pendopo Energi Batubara - Indonesia
- Indogreen Group - Indonesia
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- White Energy Company Limited
- San Jose City I Power Corp, Philippines
- Energy Development Corp, Philippines
- Parliament of New Zealand
- Bhatia International Limited - India
- ICICI Bank Limited - India
- Manunggal Multi Energi - Indonesia
- Malabar Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
- VISA Power Limited - India
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- Indika Energy - Indonesia
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Romanian Commodities Exchange
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- PTC India Limited - India
- Makarim & Taira - Indonesia
- London Commodity Brokers - England
- Simpson Spence & Young - Indonesia
- Siam City Cement PLC, Thailand
- Karbindo Abesyapradhi - Indoneisa
- Indian Energy Exchange, India
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- Power Finance Corporation Ltd., India
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- Altura Mining Limited, Indonesia
- Essar Steel Hazira Ltd - India
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- IEA Clean Coal Centre - UK
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- Globalindo Alam Lestari - Indonesia
- Minerals Council of Australia
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Vedanta Resources Plc - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Posco Energy - South Korea
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- India Bulls Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Deloitte Consulting - India
- McConnell Dowell - Australia
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sical Logistics Limited - India
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