reported that the collapse of the ruble, which has pushed up prices for
millions of Russians as the economy slides into recession, has not been bad for
everyone. The country’s steel mills are suddenly world beaters.
Producers including PAO Severstal and OAO Novolipetsk
Steel pay wages and other costs, including transportation, in rubles while
earning dollars or euros for exported steel. That’s allowing them to undercut
rivals like ArcelorMittal, the world’s largest steelmaker, while maintaining
Mr Kirill Chuyko head of equity research as BCS
Financial Group said that “This is fantastic time for the Russian steel
industry. Most of the companies are enjoying the best profitability since the
2007 and 2008 pre crisis commodity boom due to the ruble’s decline.”
Even before the ruble’s 47 decline last year the
industry was in good health. Output last year reached the highest since the
global financial crisis as demand at home was high and started to recover in
European export markets. Russia’s steelmakers have invested billions in
upgrading Soviet era mills and the nation produces more than any other country
in Europe, one of its main export markets.
According to CRU Group, an industry consultant,
now, the ruble’s slide has cut costs for Russian mills by almost half in dollar
terms. Making hot rolled coil, a benchmark product, now costs USD 244 to USD
250 per tonne in Russia compared with USD 405 per tonne in Brazil and USD 434
per ton in China.
Source – Bloomberg