This says cost pressure is primarily due to iron ore price not falling enough + high coke price.
It is natural that companies not having iron ore mines will eventually revert to mean margins, as they only get conversion profit of iron ore to steel.
On the other hand, companies having own mines have no upside limits on their margin.
Also, GPIL does not use coking coal, it uses only thermal coal.
The graph shows that fall in margin is due to costs going up and not due to fall in price of steel.
Hi @Kumar_manas , what do you think of the possibility of excess Iron ore flooding the market as steel demand flattens? Also, if China resumes Australian Iron ore consumptions, do you foresee Indian Iron ore prices falling?
The Iron ore crash happened just 2 months ago.
Iron ore fell from 200 USD to 86 USD in just 2 months in late 2021.
Thatâs a very significant crash and has already happened. So, I donât understand your question.
This kind of 60% crash happens once in 6-7 years.
And, steel demand is going up for last 100 yrs, and should go up for next 100 years.
This kind of 60% crash happens once in 6-7 years.
This answers my concern. Thanks.
Big increase in billet, sponge iron and wire rod price in Raipur today
These prices are 15% higher than best quarter of GPIL. The additional 15% price, translates into significant increase in EBITDA and net profits, because the costs - iron ore price and thermal coal havenât risen for GPIL, as it has 100% captive mining.
Does anyone know when GPILâs result date is?
New multi-month high for pellet price too- at 12,300 now.
Crazy increase in prices today.
This seems are all time high prices.
Can anyone explain the reasons behind such price hikes??
Hello everyone,
Just to confirm, currently GPIL only has 2 Captive Iron Ore Mines right?
coal and iron price increase. Cost is exploding, and is being passed on. Plus Ukraine conflict is putting doubts about exports of semis from both Ukraine and Russia
However, most of Indian cos get coal from Coal India- whose price is not increased compared to intnl prices.
Also, most cos like GPIL have 2-3 months forward arrangements with coal companies from south africa etc. so the cost will not go up for them.
Is this true?
GPIL also imports but they have inventory till Feb. Same is true for other sponge manufacturers. But scrap prices track global prices and secondary steel mills in India use scrap and are seeing immediate cost increase
So it wont impact GPIL?
Till, end of Feb it shouldnât. But after that it will obviously.
Also, is which of the following is the accurate source for price of coal?
@Rakesh_Arora Sir could you please elaborate upon this. Does GPIL have fixed contracts with coal India or fluctuating ones?
They would have obviously increased the forward cover in Nov/Dec.
The last concall was in October.
So, current cover should be till April.
Basically, they are protected from short term fluctuations.
The short term rise in end prices- will lead to windfall gain in profits and cash- which will increase book value and help in capex.
Sir, I agree that they will have windfall gain of the production till Feburary. But the stock that they must have started building in November and December was priced above $200 right? There they could also face a loss, cause right now coal prices are below that.
Coal prices were high in Oct, low in Nov and Dec, again increased now.
