Monday, 02 January, 2012
Coal India limited, an Indian state owned and world 3rd largest coal producer has introduced gross calorific value (GCV) based pricing mechanism by January 1, 2012.
The BoD of Coal India Ltd on Friday approved a proposal to adopt the internationally accepted, gross calorific value (GCV) based pricing mechanism beginning 2012. The GCV based pricing mechanism will replace existing useful heat value (UHV) pricing mechanism.
According to media reports, new coal prices, dearer by 12-15 percent, is expected to push up power generation cost by at least US$ 0.00753 per unit. Indian UMPP’s, already affected due to Indonesian regulation that requires all the coal suppliers to follow government bench-mark pricing mechanism for coal transaction. UMMP’s have appealed to the government for a power tariff rise. If Coal India’s new coal-price structure pushes the prices of indigenous coal upward, then power producers may push the government for a tariff increase to secure bottom-line of company to keep the industry alive.
Times of India reported that, January 1, coal will be sold in 17 price brands starting from the variety that produces 2,200 kcal/kg to one that produces 7,000 kcal/kg. In between, there are 15 price bands, each at an incremental rise of 300 kcal/kg. Times of India has not reported anything about price adjustment for ash content.
Imported coal
As Coal India moving from UHV pricing mechanism to GCV based mechanism, Indian utilities in the opinion that, the imported coal prices may be competitive in the future for utilities who are currently using only indigenous coal due to price as well as the quality. Indian coal used to be higher ash content compared to imported coal.
"Even if we want to use more coal of higher calorific value, CIL cannot supply it. So we will be using the same coal but paying more," said a utility official, as quoted by times of India. If Coal India fails to fulfill customers' requirements for higher GCV coal when they willing to pay high, then there is possibility utilities looking for imported coal.
However, it is not clear that, whether Coal India will also introduce a coal price index, or it will go with a fixed pricing mechanism for a specific period. Incase coal India follows Indonesian coal pricing structure and tries to introduce index based pricing mechanism for its coal, then indigenous coal prices will also vary based on monthly international indices.
According to media reports, coal India has released price structure to its customers, which has not published for public.
Media reports further said, while those using coal of B, G and F grades will not be affected as new prices will be either same or lower, but those using other coal grades will be extremely affected.
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(sourced CoalSpot.com)
Showing posts with label price negotiations. Show all posts
Showing posts with label price negotiations. Show all posts
Monday, January 2, 2012
Saturday, July 30, 2011
Vale expects high iron ore contract prices for rest of 2011: CFO
July29,2011 | sourced Platts
London :Brazilian mining company Vale, posting a succession of record quarterly profits, expects stronger performance in the second half of 2011 as iron ore output is set to increase, demand in China stays strong and prices stay high, CFO Guilherme Cavalcanti said in an interview Friday.
CEO Murilo Ferreira meanwhile told analysts that iron supply will not exceed demand in the next five years.
Vale is currently reviewing the schedules of new mining projects as delays with environmental permitting slows their implementation, Cavalcanti said in an interview from Rio de Janeiro.
"In the second half of the year, prices will be at the same levels, Chinese demand will remain strong, and difficult project execution will mean the market remains tight," Cavalcanti said.
Vale highlights record steel output globally led by China and Chinese iron ore import volumes up on 2010 levels over the first half for its growth expectation. Company chief executive Murilo Ferreira expressed concerns over fiscal issues and the pace of economic growth in the US and Europe in an analyst call Friday, but overall remained positive.
Vale's iron ore pricing formula considered, the average Platts IODEX 62%-Fe ore value of $177.016/dmt CFR North China from March to May in deciding Q3 contract prices.
With one month of spot prices outstanding in determining the average price for the June to August period to help set Vale's Q4 2011 contracts, the average over June to July is around $174/dmt CFR North China.
Cavalcanti said all Vale iron ore fines contract sales are basis Platts IODEX, and negotiations are at an early stage to convert pellet contracts to using similar indices and a Fe-content quality differential and conversion cost factor.
The end of the rainy season in Brazil in Q2 will push up output at its iron ore mines in the remaining six months, he said.
The gains in realized iron ore sales prices in Q2 were resticted by higher moisture content and a slightly lower iron ore grade on average due to heavy rains that extended into May.
The moisture content was 1.5 percentage points higher on average while the Fe-content pared back 0.2 percentage points as rains hampered mining of some areas with higher ferrous content ores to shift the grade mix down, Jose Carlos Martins, executive officer for marketing, sales and strategy told analysts on an earnings call.
SHARE BUYBACK, EXTRA DIVIDEND
The average Q2 sales price of iron ore was $145.3/mt, 15.1% higher than the previous quarter, while the average pellet price was $206.07/mt, 13.6% above Q1.
Vale is performing strong enough that cash flows allow for a recent $3 billion share buyback and $3 billion extra dividend to be paid with enough left to still meet rising costs, obligations and budgets, Cavalcanti said.
Costs are elevated mostly by the appreciation of the Brazilian currency, he added.
Vale in June announced it cut to 469 million mt from prior guidance of 522 million mt its annual iron ore output target for 2015. It produced 297 million mt in 2010.
Cavalcanti said the paring in estimated iron ore output growth was a result of slower project and expansion permitting rather than weakening in demand growth expected from customers.
China, Japan and Germany are the largest export destinations, while Brazil-based sales to steel mills and pelletizers comprise the second-biggest market after China.
Cavalcanti said Vale's project pipeline is under review, including a 90 million mt Serra Sul (S11D mine) expansion in Carajas still seeking a preliminary license. The $6.7 billion project is targeted on stream starting in the second half of 2014.
Celays are putting pressure on Vale meeting its $24 billion capital expenditure budget for 2011 that, after $6.8 billion capex in the first half of the year, leaves over $17 billion left.
"In the second semester, its normal for expenditure to pick up," Cavalcanti said of the July to December period, adding that Ferreira remains committed to boosting investments later this year to meet the allocation.
Vale on Thursday posted Q2 net profits of $6.45 billion, up 74.1% year on year and the largest ever for the period. A $1.5 billion gain from the sale of aluminum assets pushed up Q1 profit to $6.83 billion. It was largely due to higher sales and robust prices for commodities led by iron ore, nickel and copper.
Sales to Asia as a whole accounted for 52% of the total $15.35 billion revenues, up from 49.6% in Q1 2011.
Iron ore production in the quarter reached 80.3 million mt, the highest ever for a second quarter and 5.8% up on Q2 2010.
Pellet production at 13.1 million mt was up 3.8% year on year.
Vale said the first of two pellet plants in Sohar, Oman, has achieved stability at its nominal production capacity and the second plant is expected to start ramping up in the fourth quarter.
In nickel, Vale successfully ramped up the first line of its Onca Puma project in Brazil's Para state, while the second line is under final assembly, it said.
The group's vessel orders for very large iron ore carriers will remain delivered as planned, Cavalcanti said. Vale's strategy is to lower freight costs and current low freight rates that have prompted others to cancel or adapt orders is irrelevant in its case, he said.
London :Brazilian mining company Vale, posting a succession of record quarterly profits, expects stronger performance in the second half of 2011 as iron ore output is set to increase, demand in China stays strong and prices stay high, CFO Guilherme Cavalcanti said in an interview Friday.
CEO Murilo Ferreira meanwhile told analysts that iron supply will not exceed demand in the next five years.
Vale is currently reviewing the schedules of new mining projects as delays with environmental permitting slows their implementation, Cavalcanti said in an interview from Rio de Janeiro.
"In the second half of the year, prices will be at the same levels, Chinese demand will remain strong, and difficult project execution will mean the market remains tight," Cavalcanti said.
Vale highlights record steel output globally led by China and Chinese iron ore import volumes up on 2010 levels over the first half for its growth expectation. Company chief executive Murilo Ferreira expressed concerns over fiscal issues and the pace of economic growth in the US and Europe in an analyst call Friday, but overall remained positive.
Vale's iron ore pricing formula considered, the average Platts IODEX 62%-Fe ore value of $177.016/dmt CFR North China from March to May in deciding Q3 contract prices.
With one month of spot prices outstanding in determining the average price for the June to August period to help set Vale's Q4 2011 contracts, the average over June to July is around $174/dmt CFR North China.
Cavalcanti said all Vale iron ore fines contract sales are basis Platts IODEX, and negotiations are at an early stage to convert pellet contracts to using similar indices and a Fe-content quality differential and conversion cost factor.
The end of the rainy season in Brazil in Q2 will push up output at its iron ore mines in the remaining six months, he said.
The gains in realized iron ore sales prices in Q2 were resticted by higher moisture content and a slightly lower iron ore grade on average due to heavy rains that extended into May.
The moisture content was 1.5 percentage points higher on average while the Fe-content pared back 0.2 percentage points as rains hampered mining of some areas with higher ferrous content ores to shift the grade mix down, Jose Carlos Martins, executive officer for marketing, sales and strategy told analysts on an earnings call.
SHARE BUYBACK, EXTRA DIVIDEND
The average Q2 sales price of iron ore was $145.3/mt, 15.1% higher than the previous quarter, while the average pellet price was $206.07/mt, 13.6% above Q1.
Vale is performing strong enough that cash flows allow for a recent $3 billion share buyback and $3 billion extra dividend to be paid with enough left to still meet rising costs, obligations and budgets, Cavalcanti said.
Costs are elevated mostly by the appreciation of the Brazilian currency, he added.
Vale in June announced it cut to 469 million mt from prior guidance of 522 million mt its annual iron ore output target for 2015. It produced 297 million mt in 2010.
Cavalcanti said the paring in estimated iron ore output growth was a result of slower project and expansion permitting rather than weakening in demand growth expected from customers.
China, Japan and Germany are the largest export destinations, while Brazil-based sales to steel mills and pelletizers comprise the second-biggest market after China.
Cavalcanti said Vale's project pipeline is under review, including a 90 million mt Serra Sul (S11D mine) expansion in Carajas still seeking a preliminary license. The $6.7 billion project is targeted on stream starting in the second half of 2014.
Celays are putting pressure on Vale meeting its $24 billion capital expenditure budget for 2011 that, after $6.8 billion capex in the first half of the year, leaves over $17 billion left.
"In the second semester, its normal for expenditure to pick up," Cavalcanti said of the July to December period, adding that Ferreira remains committed to boosting investments later this year to meet the allocation.
Vale on Thursday posted Q2 net profits of $6.45 billion, up 74.1% year on year and the largest ever for the period. A $1.5 billion gain from the sale of aluminum assets pushed up Q1 profit to $6.83 billion. It was largely due to higher sales and robust prices for commodities led by iron ore, nickel and copper.
Sales to Asia as a whole accounted for 52% of the total $15.35 billion revenues, up from 49.6% in Q1 2011.
Iron ore production in the quarter reached 80.3 million mt, the highest ever for a second quarter and 5.8% up on Q2 2010.
Pellet production at 13.1 million mt was up 3.8% year on year.
Vale said the first of two pellet plants in Sohar, Oman, has achieved stability at its nominal production capacity and the second plant is expected to start ramping up in the fourth quarter.
In nickel, Vale successfully ramped up the first line of its Onca Puma project in Brazil's Para state, while the second line is under final assembly, it said.
The group's vessel orders for very large iron ore carriers will remain delivered as planned, Cavalcanti said. Vale's strategy is to lower freight costs and current low freight rates that have prompted others to cancel or adapt orders is irrelevant in its case, he said.
Friday, February 25, 2011
Sumitomo Metals plans to increase domestic pricing of seamless pipes
Friday, 25 February 2011, By steelorbisOn February 25, Japanese steelmaker Sumitomo Metal Industries, Ltd (Sumitomo Metals) announced that it has begun negotiations to revise pricing of seamless pipes for all domestic customers, excluding stainless pipe products. The revision will be an incremental price increase of 15 percent.
Sumitomo Metals said that the revision will apply to all domestic long-term contract and spot customers of the product as of April 2011.
The company associated the decision to increase prices with the rising demand for seamless pipes and also with iron ore, coal and other raw material costs.
Sumitomo Metals is also planning to negotiate similar price increases of gas tubes and other welded steel pipes.
Tags: pipe , tubular , Japan , Far East , production , consumption , steelmaking , East Asia and Pacific
Sumitomo Metals said that the revision will apply to all domestic long-term contract and spot customers of the product as of April 2011.
The company associated the decision to increase prices with the rising demand for seamless pipes and also with iron ore, coal and other raw material costs.
Sumitomo Metals is also planning to negotiate similar price increases of gas tubes and other welded steel pipes.
Tags: pipe , tubular , Japan , Far East , production , consumption , steelmaking , East Asia and Pacific
Thursday, February 24, 2011
Monthly Coking Coal Price Setting 'Unacceptable': JFE Chief
Wed,Feb23, 2011TOKYO (NQN)--Japan Iron and Steel Federation Chairman Eiji Hayashida said Wednesday BHP Billiton's call to revise coking coal prices monthly is "completely unacceptable."
Hayashida, also the president of JFE Steel Corp., made the comment in connection with the news that the Anglo-Australian resource giant asked major Japanese steelmakers to reset prices monthly rather than quarterly beginning in April.
Hayashida admitted such negotiations are taking place.
But he rejected the call, saying, "If prices of basic materials such as iron and steel change in the short term, it will make it harder for companies that order steel products to develop a purchase plan as well as to forecast earnings."
Tags: iron ore, steel, Anglo-Australian resource, raw mat
Saturday, February 19, 2011
Spot Metallurgical Coal in U.S. Mixed, Energy Publishing Says
By Mario Parker - Feb 18, 2011 9:49 PM GMT+0530
Metallurgical coal prices on the U.S. spot market increased ahead of final negotiations for the quarterly benchmark contract, Energy Publishing Inc. said.
Spot prices for low-volatility coking coal gained $1.25, or 0.4 percent, to $321.25 a ton in the week ended today, according to the Knoxville, Tennessee-based data provider. High-volatility coal was unchanged at $287.50.
Energy Publishing said buyers and sellers of metallurgical coal are anticipating that the benchmark contract between the BHP Billiton-Mitsubishi Alliance and Japanese steelmakers will be announced by March 2.
“U.S. producers continue to be in a bit of a holding pattern as they await news of the quarterly settlement,” Energy Publishing said.
Energy Publishing says it surveys buyers and sellers of coal to determine pricing.
(sourced:bloomberg)
Tags:BHP Billiton-Mitsubishi Alliance, Japanease steelmakers, Energy Industry,
Friday, January 28, 2011
Ukraine in talks with US firms to develop Black Sea shelf
Friday, 28 Jan 2011
RIA Novosti citing Mr Nikolai Azarov Prime Minister of Ukraine as saying that, Ukraine intends to buy a drilling platform from Singapore this year to extract hydrocarbons on the Black Sea shelf and reduce its dependence on natural gas imports.
The Kerch section of the Black Sea shelf alone has been estimated to contain 10.8 billion cubic meters of natural gas, which could increase Ukraine annual gas production by 4 billion cubic meters and oil production by 3 million metric tons.
Mr Azarov said Ukraine was also negotiating the purchase with other countries and planned to extract gas from alternative sources, such as shale and coal layers. He said that "We are in talks with an American company on transfer of the relevant technology, adding that the government's plans were above all aimed at reducing Ukraine's dependence on gas imports from Russia.”
Although the Black Sea shelf is rich in hydrocarbons, they lie around two kilometers under water and can only be reached by floating drilling platforms. Ukraine Chernomorneftegaz oil and gas Exploration Company currently only has stationary platforms that do not reach beyond 70 meters.
(Sourced from RIA Novosti)
RIA Novosti citing Mr Nikolai Azarov Prime Minister of Ukraine as saying that, Ukraine intends to buy a drilling platform from Singapore this year to extract hydrocarbons on the Black Sea shelf and reduce its dependence on natural gas imports.
The Kerch section of the Black Sea shelf alone has been estimated to contain 10.8 billion cubic meters of natural gas, which could increase Ukraine annual gas production by 4 billion cubic meters and oil production by 3 million metric tons.
Mr Azarov said Ukraine was also negotiating the purchase with other countries and planned to extract gas from alternative sources, such as shale and coal layers. He said that "We are in talks with an American company on transfer of the relevant technology, adding that the government's plans were above all aimed at reducing Ukraine's dependence on gas imports from Russia.”
Although the Black Sea shelf is rich in hydrocarbons, they lie around two kilometers under water and can only be reached by floating drilling platforms. Ukraine Chernomorneftegaz oil and gas Exploration Company currently only has stationary platforms that do not reach beyond 70 meters.
(Sourced from RIA Novosti)
Saturday, January 22, 2011
Nippon, Toyota may OK 1 pct steel price hike - Nikkei
Jan 22, 2011 (Reuters) - The world's fourth-biggest steelmaker, Nippon Steel Corp (5401.T: Quote), and Toyota Motor Corp (7203.T: Quote) are likely to agree on an around 1 percent increase in steel prices for the second half of fiscal 2010, the Nikkei reported, citing sources close to the negotiations.
The figure is much smaller than the roughly 25 percent jump for the first half of the year, the business daily said.
After falling earlier in the October-March period, iron ore and coking coal prices are on the rise again and steelmakers have thus sought to pass the higher costs to carmakers and other major customers, the paper said.
Faced with deteriorating margins on vehicle exports, Toyota demanded a price cut, arguing that steelmakers costs for importing raw materials are declining due to a stronger yen, the Nikkei said. (Reporting by Saqib Iqbal Ahmed in Bangalore)
The figure is much smaller than the roughly 25 percent jump for the first half of the year, the business daily said.
After falling earlier in the October-March period, iron ore and coking coal prices are on the rise again and steelmakers have thus sought to pass the higher costs to carmakers and other major customers, the paper said.
Faced with deteriorating margins on vehicle exports, Toyota demanded a price cut, arguing that steelmakers costs for importing raw materials are declining due to a stronger yen, the Nikkei said. (Reporting by Saqib Iqbal Ahmed in Bangalore)
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