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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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Monday, 20 July 09
INDONESIA PRODUCES 72 MILLION MT IN FIRST HALF OF YEAR: OFFICIAL
Indonesia produced 72 million mt of coal in the first half of 2009, or 31.3% of the government’s target this year, a senior government officia ...
Sunday, 19 July 09
JINDAL S&P IN TALKS TO BUY SA COAL MINE FOR RS 350-400 CR (US$ 80 - 90 MILLION)
Economic Times reported that, Naveen Jindal-led Jindal Steel & Power (JSPL) is acquiring a thermal coal mine in South Africa, a top company exec ...
Saturday, 18 July 09
REN POWER CZ COMMISSIONS ANOTHER PHOTOVOLTAIC POWER STATION
COALspot.com (Press Release): REN Power CZ, a company in the Czech Coal Group, has put into operation another photovoltaic power station. The plant ...
Saturday, 18 July 09
THE FUTURE FOR SUPRAMAX FOR NEXT 3 YEARS TILL 2012 WOULD BE AROUND US$ 13,500 PER DAY - CAPT. REDDY
COALspot.com ( Singapore): The market moved up sharply this week , which was quite unexpected.
The BDI was up by 557 which is an increase of 18 ...
Friday, 17 July 09
CHINA COAL-SPOT PRICES EDGE LOWER, SUPPLY APLENTY
China Mining reported that, spot prices in China's top coal shipping port Qinhuangdao edged lower from a week earlier, as supply grew, offsetting t ...
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- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- PowerSource Philippines DevCo
- GVK Power & Infra Limited - India
- Latin American Coal - Colombia
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Anglo American - United Kingdom
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- Manunggal Multi Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Semirara Mining Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- Port Waratah Coal Services - Australia
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- The University of Queensland
- Riau Bara Harum - Indonesia
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Interocean Group of Companies - India
- Georgia Ports Authority, United States
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Karbindo Abesyapradhi - Indoneisa
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- Bukit Makmur.PT - Indonesia
- White Energy Company Limited
- Formosa Plastics Group - Taiwan
- Lanco Infratech Ltd - India
- Coastal Gujarat Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- Economic Council, Georgia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- SMG Consultants - Indonesia
- Standard Chartered Bank - UAE
- Indonesian Coal Mining Association
- Kaltim Prima Coal - Indonesia
- Ministry of Transport, Egypt
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- Thiess Contractors Indonesia
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- The Treasury - Australian Government
- Orica Mining Services - Indonesia
- Intertek Mineral Services - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- Merrill Lynch Commodities Europe
- Therma Luzon, Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Bhatia International Limited - India
- Bayan Resources Tbk. - Indonesia
- European Bulk Services B.V. - Netherlands
- Siam City Cement PLC, Thailand
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- Maheswari Brothers Coal Limited - India
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Agrawal Coal Company - India
- Global Business Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Tata Chemicals Ltd - India
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Directorate General of MIneral and Coal - Indonesia
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- Chettinad Cement Corporation Ltd - India
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Central Electricity Authority - India
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- Minerals Council of Australia
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- McConnell Dowell - Australia
- Edison Trading Spa - Italy
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