The Japanese steel mills are in the midst of a significant improvement in cost position given lower raw material prices and a weaker Japanese yen. In 2012, the strong yen--at about 80 per US dollar--was a "killer" for the leading Japanese steelmakers. It's now far weaker at 99 per US dollar, and it's become a positive for the mills as it has lowered their costs on a dollar basis. If steelmakers' raw material prices fall further, the Japanese mills will be competitive with the Russians in many markets because their plants are located at deep water ports. By comparison, it costs MMK of Russia, a major hot-rolled band exporter, about $80 per metric ton to ship its product to Black Sea ports.
The graphics portray as of March 2013 the marginal cost to produce hot-rolled band in Japan for the average cost integrated producer. Please note that the figures are FOB the steel plant; hence, there's no adjustment for the cost to ship to the port of export which can be quite high in the case of most Russian plants and almost nil in the case of most Japanese plants.
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