Adaro Energy, Bakrie & Brothers, Bumi: Indonesia Equity Preview

Mar 7,2011 7:35 AM GMT+0530
By Berni Moestafa -

Shares of the following companies may have unusual moves in Indonesian trading. Stock symbols are in parentheses, and share prices are as of the previous close.

The Jakarta Composite index (JCI) gained 1.4 percent to 3,542.90.

Coal producers: Power-station coal prices at Australia’s Newcastle port, an Asian benchmark, fell 1.7 percent to $129.48 a metric ton in the week ended March 4, according to the globalCOAL NEWC Index.

PT Bumi Resources (BUMI IJ), Asia’s largest exporter of power-station coal, dropped 1.6 percent to 3,025 rupiah and PT Adaro Energy (ADRO IJ), Indonesia’s second-biggest coal mining company, gained 2.2 percent to 2,375 rupiah.

Energy companies: Crude oil for April delivery rose to a 29-month high in New York on March 4, advancing 2.5 percent to $104.42 a barrel. The contract was at $105.14 a barrel in after- hours trading as of 8:05 a.m. Jakarta time.

PT Medco Energi Internasional (MEDC IJ), Indonesia’s biggest listed oil company, fell 0.9 percent to 2,875 rupiah and PT Energi Mega Persada (ENRG IJ), the second largest, slipped 0.9 percent to 111 rupiah.

PT Bakrie & Brothers (BNBR IJ): The Indonesian investment company will get $601.75 million of loans from the Singapore unit of Credit Suisse Group AG, Bisnis Indonesia reported, citing Corporate Secretary R.A. Sri Dharmayanti. The loans will be used to repay debt, the report said. Bakrie & Brothers retreated 2.9 percent to 67 rupiah. (bloomberg)

Tags : Jakarta Composite index JCI,

POSCO to increase cost cutting on ore and coal price surge

Saturday, 19 Feb 2011

POSCO the world’s third biggest steelmaker by output and its units raised their cost cutting target for this year by 20% to sustain profits amid rising iron ore and coal prices.

Mr Chung Jae Woong a spokesman of POSCO said that the group aims to cut overall costs by KRW 2.4 trillion (USD 2.2 billion) this year from a previous target of KRW 2 trillion in an effort to improve competitiveness.

Ms Kim Gyung Jung an analyst with Eugene Investment & Securities Co in Seoul said that “That’s part of POSCO’s efforts to sustain stable profits given that raw material costs are rising, while it’s not easy for them to pass on cost gains to customers.”

POSCO which underperformed the local benchmark stock index last year, in January reported a worse than expected drop in fourth quarter profit after raw material costs gained and demand from builders and home-appliance makers waned. Japan’s Nippon Steel Corp and Sumitomo Metal Industries Ltd said that they plan to combine to cut costs.

HSBC Holdings Plc said that iron ore prices almost doubled from the first quarter to the end of 2010, while coking-coal costs gained 38%. Coal has risen since floods disrupted mining in the northeast of Australia, the biggest exporter.

According to Credit Suisse Group AG on January 7, the price of iron ore will average 21% higher this year and may jump to a record should anticipated supply growth be curbed. Iron ore and coking coal are the two main ingredients for making steel.

(Sourced from Bloomberg)

Tags:steelmakers, steel mills, South Korean

Coking coal spot prices jump by 14pct last week - Report

Thursday, 27 Jan 2011
Bloomberg reported that Australian coking coal jumped 14% last week as buyers continued to assess the effect on supplies of flooding in the state of Queensland. Queensland, producer of about half of global seaborne supply of coking coal for steelmaking, suffered its worst floods in 50 years this month.

Shipments from the port of Hay Point, the biggest export harbor for the material, dropped 22% last month from November as floodwaters shut mines and damaged rail lines.
Mr Daniel Brebner, an analyst at Deutsche Bank AG in London, said that "The market's still trying to understand what the impact will be in terms of volumes removed. We have seen the worst of the flooding, and that’s behind us and really it comes down to, now, how quickly production can get back on stream."

According to Petersfield, England based market researcher IHS McCloskey, Australian hard prime coking coal sold for USD 320 a tonne on average last week, up from USD 280 the week before. That's the highest level for the data going back to the week ended November 5th 2010.
Mr Brebner said that "Prices may rise over the course of the next month, and USD 350 to USD 400 a tonne is within the realm of possibility."

BHP Billiton Limited, an equal partner in the world's biggest exporter of coking coal, on January 20th 2011 predicted that disruption at its Australian operations until the end of June 2011. Thermal coal from Richards Bay, South Africa, site of the continent's biggest export facility for the fuel, fell 6.1% to an average USD 120.83 a tonne. Thermal coal is burned to generate power. Shipments from the port climbed 3.8% in 2010 to 63.43 million tonnes, the first annual increase in five years.
Benchmark European coal derivatives headed for a third consecutive lower close. Coal for delivery to Amsterdam, Rotterdam or Antwerp with settlement next year fell 35 cents or 0.3% to USD 115 a tonne in London. The data are drawn from information supplied by ICAP Plc, GFI Group Inc, Spectron Group Limited, Tullett Prebon Plc, Credit Suisse Group AG, McCloskey, Bloomberg and Tradition Financial Services.(Sourced from http://www.bloomberg.net/)

Steam coal price may reach USD 150 a tonne

According to Credit Suisse Group AG, power station coal may rise to USD 150 a tonne in the coming weeks, driven by extreme weather conditions, before declining in the year.
Mr Joachim Azria a New York based analyst with Credit Suisse said that “The unexpected cold weather so far this season has taken a toll on global energy inventories and reset energy prices to varying degrees. We expect coal prices to move above USD 150 in coming weeks and possibly higher if there are further significant disruptions to supply.”
Mr Azria said that prices first rose because of a colder than normal winter in the Northern Hemisphere, prompting restocking by countries including China. Further price increases were supported by supply fears because of heavy rains in Indonesia, Australia and Colombia, as well as floods in Queensland state.
According to IHS McCloskey, power station coal at the port of Newcastle in Australia’s New South Wales, the benchmark for Asia, jumped 4.5% to USD 131.80 a tonne in the week ended January 7th 2011.
Sourced from Bloomberg

Iron Ore May Jump to Record $250/Ton in 2011, Credit Suisse Says

By Jesse Riseborough January 07, 2011, 7:05 AM EST
Jan. 7 (Bloomberg) -- The price of iron ore, the key raw material for making steel, will average 21 percent higher this year and may jump to a record should anticipated supply growth be curbed, according to Credit Suisse Group AG.
The spot price of iron ore delivered to China including freight costs will probably average $178 a metric ton, Credit Suisse analysts wrote today in a report. That compares with the $147 a ton average for 2010, according to The Steel Index.

The world’s biggest iron ore exporters last year scrapped a custom of pricing cargoes in 12-month periods and switched most sales to quarterly contracts. A jump in prices this year will hurt steel producers already facing a surge in costs for coking coal, the other key raw material, as floods curb supplies in Australia.

“Supply-demand conditions look extremely tight” in the first half, Credit Suisse said. “Should supply failures occur, however, we could readily see iron ore spot prices spike through previous $200 a ton highs towards $250 a ton in the second quarter of 2011.”
The price rose 0.2 percent to $171.30 a ton yesterday, according to the Steel Index.
Quarterly sales contracts for some iron ore suppliers are calculated based on the average price over the preceding three months with a one-month lag.
The second quarter of 2011 will mark the peak in iron ore pricing as new supplies enter the market, particularly from the second half of 2012, Credit Suisse said. “However any delays to these expansions will further tighten markets,” it said.
Brazil’s Vale SA, Rio Tinto Group and BHP Billiton Ltd. are the world’s three-largest iron ore exporters. Rio and BHP both ship ore from operations in the Pilbara region of north Western Australia state.
Source: Bloomberg, Editors:Tony Barrett, Alastair Reed.Reporter: Jesse Riseborough in London.