Posted on 19 Mar 2025
The sharp appreciation of the rouble is putting pressure on Russian steel exporters, forcing them to reconsider their pricing strategies and even suspend sales temporarily, market participants inform Kallanish.
Market expectations suggest the exchange rate will continue strengthening until late March, adding further uncertainty. Over the past week, the rouble has strengthened notably, resulting in a $20/tonne theoretical loss for billet exporters.
Major Russian mills exporting pig iron, slab, billet and hot rolled coil in large volumes are expected to pause sales for a few days to observe exchange rate trends and attempt to cut raw material costs.
Several mid-sized mills heard were setting new billet offer prices at $460-465/tonne fob Novorossiysk, while some were considering halting exports. Larger producers will likely continue exporting but aim to reduce volumes significantly.
“The official exchange rate dropped to 81.502 roubles per dollar, a 3.3% [dollar] decline in a single day, requiring billet exporters to increase their fob prices by around $15/tonne to offset losses. This means the minimum offer price should rise from $450-455 to $465-470/t fob, while some producers, such as Tula, need $485-490/t fob to maintain profitability,” a trader says.
A Russian producer remarks that at the current exchange rate, even $500/t fob is insufficient for billet to make a margin, and mills may opt to consume more pig iron domestically while reducing scrap purchases. Meanwhile, bids for billet were at $440/t fob Novorossiysk, making exports increasingly challenging.
Source:Kallanish
