Russia’s flat steel market is in wait and watch mode
After the U.S. government announced fresh sanctions* against two dozen Russian nationals and 14 Russian entities in the first week of Apr’18, the country’s currency, Rouble experienced a dramatic fall of 4% against dollar, its biggest plunge in last three years since Jan’15.
Although the depreciation of Russian currency is not a favourable phenomenon for country’s economy, it surely offers opportunities to the exporters as selling goods in the international market during such time brings in more money to the sellers.
While the current situation offers a good opportunity to the Russian steel exporters, the global price trend for flat products is a bit negative resulting which country’s steel exporters have entered into wait and watch mode.
The prices of flat steel products in Russia remained stable w-o-w basis. According to the market sources, CIS-origin HRC is currently being offered at USD 59-600/MT on FoB Black Sea basis. Whereas the domestic 4mm HR Sheet prices also remained unchanged and is being traded at 43,000-44,800 roubles (USD 692-721/MT) cpt Moscow. Domestic prices include VAT.
Russia’s billet prices have also remained unchanged this week and are currently being offered at USD 520/MT, FoB Black Sea. However the speculations are rife in the market that billet offers are expected to decline in coming days amid uncertainty in the global scrap market.
What are U.S. Sanctions on Russia and how it has impacted Russian currency?
*Economic sanctions are a withdrawal of financial and trade partnerships levied against governments to punish them for violating international norms such as what Russia did by invading sovereign Ukraine without provocation. The U.S. body that oversees sanctions is the U.S Department of the Treasury.
The U.S. sanctions announced in 2014 specifically targeted Russia’s energy sector, which makes up more than half of the country’s GDP (Gross Domestic Product). No U.S. oil company can do business with Russia, nor can any companies sell drilling technology needed to access oil and gas reserves. U.S. banks cannot issue long-term loans to Russian businesses for energy-focused projects. European banks are also prohibited from engaging in similar financing, as the EU (European Union) has also sanctioned Moscow.
Now in Apr’18, Trump government has announced new sanctions targeting Russian oligarchs and government officials in an aggressive response to alleged Russian meddling in the 2016 U.S. election. This has adversely impacted the Russian stocks and currency resulting in its depreciation against US dollar.
The impact of the new measures could threaten Russia’s fragile economic recovery, which was only just beginning to take hold after a wave of sanctions against Russia introduced in 2014.
Russian steel major, Evraz started a new blast furnace
Evraz has launched a new blast furnace at its NTMK (Nizhny Tagil Metallurgical Plant) with a capacity of 2.5 MnT per annum to maintain its 5 MnT pig iron output. According to the reports, the construction of new blast furnace will be an alternative to another blast furnace which will be idle for first category repairs. NTMK will have three blast furnaces now but it plan to operate only two blast furnaces at any given time and the new start-up will enable the company to maintain pig iron output at 5 MnT per year and halt another one indefinitely for repairs.
The company uses all its pig iron output for its own steelmaking operations so the start-up of the new blast furnace will have no impact on pig iron prices. NTMK also produces long products including rails, beams and wheels, along with slab for its steelmaking and rolling plants in U.S., Canada, and Kazakhstan.
Russia’s NLMK steel output up by 3% y-o-y
Russia’s largest steel producer NLMK announced that its first-quarter output (Jan-Mar’18) rose 3% y-o-y basis to 4.33 MnT. The company’s first-quarter group sales grew by 13% y-o-y to 4.15 MnT due to higher demand in Russia and the European Union.
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