The graphics below portray the significant currency devaluation versus the US dollar for Japan, Brazil and, especially, Russia. These devaluations have improved the cost competitiveness of these groups. The Russian steel mills, by far, are now the lowest cost in the world.
So far this year, versus the US dollar, the currencies of Japan, Brazil and Russia have weakened about 16 percent, 10 percent and 107 percent, respectively. We estimate that about two thirds of Japan’s and Brazil’s costs are denominated in the home currency, and 70-80 percent of Russia’s costs.
The stronger the dollar, all other things held the same, the lower the price of HRB in the world market. With the Russian ruble at about 65 per US dollar, the operating cost to produce hot-rolled band in Russia may be only $270 per tonne.
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