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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, 14 July 09
NEWCASTLE WEEKLY COAL EXPORTS RISE 11%; SHIP QUEUE DECREASES
Bloomberg reported that, Coal shipments from Australia’s Newcastle port, the world’s biggest export harbor for the fuel, gained 11 ...
Monday, 13 July 09
EXPORT COAL PRODUCTION FROM MOOIPLAATS COULD START IN NOVEMBER
Mining Weekly reported that, South Africa-focused emerging miner Coal of Africa (CoAL) has completed a revised mining layout for its Mooiplaats ...
Monday, 13 July 09
NAPOCOR AWARDS 195,000 T COAL TO INDONESIAN FIRMS
ABC-CBN News reported that, Philippine electricity producer National Power Corp (Napocor) has awarded 195,000 tons in coal supply contracts to two I ...
Monday, 13 July 09
PAKISTAN TO IMPORT ABOUT 2.4 MILLION TONS OF INDONESIAN COAL AND 1.6 MILLION TON OF SOUTH AFRICAN COAL WITHIN NEXT 12 MONTHS
COALspot.com (Pakistan) : Pakistan has exported well over 12 million tons of cement while local sales have dropped a bit with the result 33 million to ...
Monday, 13 July 09
COAL SECTOR IN VIETNAM INCREASE THE TARGET 43 MILLION TONNES THIS YEAR
Asian Mining Stock reported that, there was a change in a very good Coal Mining Industries Group (TKV) that Vietnam has decided to increase coa ...
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- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- Australian Coal Association
- PowerSource Philippines DevCo
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Star Paper Mills Limited - India
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Jindal Steel & Power Ltd - India
- Indika Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Thiess Contractors Indonesia
- AsiaOL BioFuels Corp., Philippines
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Kalimantan Lumbung Energi - Indonesia
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- Grasim Industreis Ltd - India
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Indonesian Coal Mining Association
- VISA Power Limited - India
- Marubeni Corporation - India
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Pendopo Energi Batubara - Indonesia
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- Miang Besar Coal Terminal - Indonesia
- Electricity Authority, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- Videocon Industries ltd - India
- Krishnapatnam Port Company Ltd. - India
- Latin American Coal - Colombia
- Posco Energy - South Korea
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Kumho Petrochemical, South Korea
- Gujarat Mineral Development Corp Ltd - India
- Mercator Lines Limited - India
- Standard Chartered Bank - UAE
- Leighton Contractors Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Coal and Oil Company - UAE
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- SN Aboitiz Power Inc, Philippines
- Malabar Cements Ltd - India
- London Commodity Brokers - England
- Kideco Jaya Agung - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- GVK Power & Infra Limited - India
- Central Java Power - Indonesia
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- Uttam Galva Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- OPG Power Generation Pvt Ltd - India
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Formosa Plastics Group - Taiwan
- Rashtriya Ispat Nigam Limited - India
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Independent Power Producers Association of India
- CNBM International Corporation - China
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- India Bulls Power Limited - India
- GMR Energy Limited - India
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Medco Energi Mining Internasional
- ASAPP Information Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement PLC, Thailand
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Wood Mackenzie - Singapore
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Coastal Gujarat Power Limited - India
- LBH Netherlands Bv - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
- The University of Queensland
- Holcim Trading Pte Ltd - Singapore
- Altura Mining Limited, Indonesia
- Eastern Energy - Thailand
- Parliament of New Zealand
- Jaiprakash Power Ventures ltd
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- PNOC Exploration Corporation - Philippines
- Heidelberg Cement - Germany
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- ICICI Bank Limited - India
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining and Power Corporation, Philippines
- Agrawal Coal Company - India
- GN Power Mariveles Coal Plant, Philippines
- GAC Shipping (India) Pvt Ltd
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Energy Link Ltd, New Zealand
- Essar Steel Hazira Ltd - India
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Meenaskhi Energy Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- International Coal Ventures Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Economic Council, Georgia
- Therma Luzon, Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Carbofer General Trading SA - India
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
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