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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, 16 July 09
JAPAN'S J - POWER STARTS OPS AT NEW 600 MW COAL UNIT
Reuters, a worlds leading news agency reported that, Electric Power Development Co (J-Power) said on Thursday it started commercial operations at it ...
Thursday, 16 July 09
DELIVERY OF COAL MINE EXPLORATION THROUGH NEWCASTLE PORT ROSE 11 PERCENT
July 16th, 2009 Newcastle is a port in Australia that provides services in the delivery of coal from Australia to other countries. Newcastle port ha ...
Thursday, 16 July 09
CIL KEEN ON JOINT VENTURES
* Targets to raise production by 10 m tonnes by 2012
* Plans to tap reserves of abandoned mines
The Hindu, an Indian news paper reported that, t ...
Wednesday, 15 July 09
COAL INDIA INVITES EOI FOR COAL MINING IN FOREIGN COUNTRIES
Economict Tmes reported that, Coal India, a leading PSU with a status of Navratna, today, invited Expression of Interest for selection of strategic ...
Wednesday, 15 July 09
BANGLADESH TO IMPORT COAL FROM INDIA FOR 1 MORE YR
Bangladesh has decided to import coal from neighbour India for another year to save foreign exchange and time, a commerce ministry official said on ...
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- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Star Paper Mills Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Authority, New Zealand
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Uttam Galva Steels Limited - India
- The University of Queensland
- Posco Energy - South Korea
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Bukit Makmur.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Indian Energy Exchange, India
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- LBH Netherlands Bv - Netherlands
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Australian Coal Association
- Thai Mozambique Logistica
- PTC India Limited - India
- Renaissance Capital - South Africa
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- Savvy Resources Ltd - HongKong
- Banpu Public Company Limited - Thailand
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Port Waratah Coal Services - Australia
- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Central Java Power - Indonesia
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- Power Finance Corporation Ltd., India
- Iligan Light & Power Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Jorong Barutama Greston.PT - Indonesia
- Australian Commodity Traders Exchange
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- Kapuas Tunggal Persada - Indonesia
- Timah Investasi Mineral - Indoneisa
- Eastern Coal Council - USA
- PowerSource Philippines DevCo
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Sojitz Corporation - Japan
- Pendopo Energi Batubara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- Electricity Generating Authority of Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- Makarim & Taira - Indonesia
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Malabar Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- Central Electricity Authority - India
- Planning Commission, India
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- Lanco Infratech Ltd - India
- ICICI Bank Limited - India
- Semirara Mining Corp, Philippines
- Agrawal Coal Company - India
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Global Business Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Bayan Resources Tbk. - Indonesia
- MS Steel International - UAE
- Anglo American - United Kingdom
- Essar Steel Hazira Ltd - India
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Sical Logistics Limited - India
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
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