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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, 17 July 09
THE NEW LAW OF MINERAL AND COAL MINING NO 4/2009 CREATE CONDUCIVE CLIMATE OF INVESTMENT IN INDONESIA
COALspot.com (Indonesia): The new Law of Mineral and Coal Mining No 4/2009, which replaces the old mining law No. 11/1967 has been signed by the Pre ...
Friday, 17 July 09
INDIA COAL TRADERS MUST OWN POWER, MINES - C&O BOSS
· Coal traders need to diversify to grow
· Coastal Energen to build first merchant power plant
· Tamil Nadu to see st ...
Friday, 17 July 09
CHINA SHENHUA ENERGY'S COAL OUTPUT SWELLS 17.6% IN H1
China Knowledge reported that, China Shenhua Energy Co Ltd, which is engaged in the coal mining, power generation and transportation businesses, on ...
Thursday, 16 July 09
CHINA ISSUES SECOND BATCH OF '09 EXPORT QUOTAS
China has issued 25 million tonnes of coal export quotas for the second batch this year, the National Development and Reform Commission said Wednesd ...
Thursday, 16 July 09
NTPC TO ENGAGE BANKERS TO ACQUIRE OVERSEAS COAL MINES
The Hindu reported that, State-run power generation company NTPC said it would appoint merchant bankers next month for acquiring coal mines identifi ...
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- Kideco Jaya Agung - Indonesia
- Malabar Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- Ind-Barath Power Infra Limited - India
- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- Toyota Tsusho Corporation, Japan
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- New Zealand Coal & Carbon
- Ministry of Mines - Canada
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Directorate Of Revenue Intelligence - India
- Eastern Energy - Thailand
- Mjunction Services Limited - India
- Madhucon Powers Ltd - India
- LBH Netherlands Bv - Netherlands
- Trasteel International SA, Italy
- Central Java Power - Indonesia
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Planning Commission, India
- Grasim Industreis Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- Interocean Group of Companies - India
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Indian Oil Corporation Limited
- Riau Bara Harum - Indonesia
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Directorate General of MIneral and Coal - Indonesia
- Parliament of New Zealand
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- Globalindo Alam Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Economic Council, Georgia
- Posco Energy - South Korea
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Georgia Ports Authority, United States
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- GAC Shipping (India) Pvt Ltd
- IEA Clean Coal Centre - UK
- Coastal Gujarat Power Limited - India
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- The State Trading Corporation of India Ltd
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Binh Thuan Hamico - Vietnam
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- Tamil Nadu electricity Board
- Kohat Cement Company Ltd. - Pakistan
- Jindal Steel & Power Ltd - India
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Essar Steel Hazira Ltd - India
- San Jose City I Power Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- Gujarat Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- Intertek Mineral Services - Indonesia
- Aditya Birla Group - India
- PTC India Limited - India
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Manunggal Multi Energi - Indonesia
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Cement Manufacturers Association - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indo Tambangraya Megah - Indonesia
- Bulk Trading Sa - Switzerland
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Bhatia International Limited - India
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- Australian Coal Association
- London Commodity Brokers - England
- The University of Queensland
- Attock Cement Pakistan Limited
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