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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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Saturday, 11 July 09
THE IMPORT OF STEAM COAL FROM INDONESIA & S/A TO INDIA WILL CONTINUE TO INCREASE - VISTAAR
COALspot.com ( Singapore): Vistaar Shipping, an experienced ship operator in Singapore said, The market continued to be soft this with doubts a ...
Friday, 10 July 09
DMO AND ICPR AIMED AT SECURING DOMESTIC COAL SUPPLY
COALspot.com (Indonesia): According to website of DGCMG, the implementation of coal Domestic Market Obligation (DMO) and the Indonesian Coal P ...
Friday, 10 July 09
INDONESIAN MINING LAW IN TRANSITION
Further to the enactment of Law No. 4 of 2009 on Mineral and Coal Mining (“Law 4/2009”), the enactment of various implementing regulatio ...
Thursday, 09 July 09
COAL EXPORTS TO CHINA MAY FALL AS PRICES, SHIPPING RATES RISE
CHINA'S appetite for Australian coal may fall in July and August from earlier highs, due to a recent recovery in regional prices and higher interna ...
Thursday, 09 July 09
GARDA LISTS SHARES IN LOCAL BOURSE
Local coal company PT Garda Tujuh Buana officially listed its shares in the Indonesia Stock Exchange (IDX).
The listing followed the company's p ...
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- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Price Waterhouse Coopers - Russia
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
- Bhushan Steel Limited - India
- Pendopo Energi Batubara - Indonesia
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- India Bulls Power Limited - India
- Gujarat Sidhee Cement - India
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- Latin American Coal - Colombia
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bahari Cakrawala Sebuku - Indonesia
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- Indika Energy - Indonesia
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Deloitte Consulting - India
- GMR Energy Limited - India
- The Treasury - Australian Government
- Indogreen Group - Indonesia
- Salva Resources Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
- CIMB Investment Bank - Malaysia
- The University of Queensland
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Bangladesh Power Developement Board
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Wilmar Investment Holdings
- Indian Oil Corporation Limited
- Banpu Public Company Limited - Thailand
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- IHS Mccloskey Coal Group - USA
- London Commodity Brokers - England
- Xindia Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
- Indo Tambangraya Megah - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Mineral Development Corp Ltd - India
- Jindal Steel & Power Ltd - India
- Kaltim Prima Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Ministry of Mines - Canada
- Manunggal Multi Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Ministry of Transport, Egypt
- Siam City Cement PLC, Thailand
- Semirara Mining and Power Corporation, Philippines
- CNBM International Corporation - China
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- Standard Chartered Bank - UAE
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Kumho Petrochemical, South Korea
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- SN Aboitiz Power Inc, Philippines
- Tamil Nadu electricity Board
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- Energy Link Ltd, New Zealand
- Makarim & Taira - Indonesia
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- Gujarat Electricity Regulatory Commission - India
- McConnell Dowell - Australia
- Coalindo Energy - Indonesia
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Planning Commission, India
- Port Waratah Coal Services - Australia
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Miang Besar Coal Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Sakthi Sugars Limited - India
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- Malabar Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Carbofer General Trading SA - India
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Agrawal Coal Company - India
- Orica Mining Services - Indonesia
- Central Java Power - Indonesia
- Bharathi Cement Corporation - India
- Orica Australia Pty. Ltd.
- PowerSource Philippines DevCo
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Toyota Tsusho Corporation, Japan
- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Africa Commodities Group - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Essar Steel Hazira Ltd - India
- Holcim Trading Pte Ltd - Singapore
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