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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, 15 July 09
INDONESIAN FIRM SUBMITS LOWEST BID FOR NAPOCOR COAL
ABS-CBN News reported that, An Indonesian firm offered to supply 195,000 tons of thermal coal to top Philippine electricity producer National Power ...
Wednesday, 15 July 09
INDIAN COAL MINISTRY TO CONSIDER POWER PLANT ALTERATION PROPOSALS
PTI reported that the coal ministry has agreed to consider applications of power plants seeking long term coal linkage due to enhancement in electri ...
Wednesday, 15 July 09
SHENHUA STARTS WORK ON INDONESIA POWER PLANT
Bloomberg reported that China Shenhua Guohau Power a unit of China’s biggest coal producer started construction of a power plant and mine in I ...
Wednesday, 15 July 09
PLN OPENS TENDERS FOR SUPPLY OF LOW - GRADE COAL
The Jakarta Globe, a Indonesian new paper reported that, State power utility PT PLN has opened a tender for the supply of low-grade coal for the nat ...
Tuesday, 14 July 09
MMTC SAYS MAY RE-TENDER FOR 12.5 MLN T COAL
* KIS has demanded investigation into procurement
* MMTC says import delays could add to power shortages
Alibaba reported that, India's s ...
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- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
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- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Minerals Council of Australia
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- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
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- Australian Commodity Traders Exchange
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- Meralco Power Generation, Philippines
- PTC India Limited - India
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- Thai Mozambique Logistica
- VISA Power Limited - India
- IHS Mccloskey Coal Group - USA
- Central Electricity Authority - India
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Kideco Jaya Agung - Indonesia
- Malabar Cements Ltd - India
- Altura Mining Limited, Indonesia
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- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wood Mackenzie - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Indian Energy Exchange, India
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Sical Logistics Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Eastern Coal Council - USA
- Mercator Lines Limited - India
- Bangladesh Power Developement Board
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
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- Sindya Power Generating Company Private Ltd
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
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- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- ICICI Bank Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Africa Commodities Group - South Africa
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
- Australian Coal Association
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Price Waterhouse Coopers - Russia
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Vijayanagar Sugar Pvt Ltd - India
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Deloitte Consulting - India
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- European Bulk Services B.V. - Netherlands
- Therma Luzon, Inc, Philippines
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- Maharashtra Electricity Regulatory Commission - India
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- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- Electricity Authority, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Energy Development Corp, Philippines
- The University of Queensland
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Samtan Co., Ltd - South Korea
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- Maheswari Brothers Coal Limited - India
- Kumho Petrochemical, South Korea
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Wilmar Investment Holdings
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- Asia Pacific Energy Resources Ventures Inc, Philippines
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