Posted on 30 Oct 2023
Russian slab producers were engaged in activity in the Asian market, but the rouble strengthening reduced the attractiveness of exports last week, Kallanish notes.
Russia’s central bank has raised its key interest rate to 15% in response to a weak rouble, significantly increased inflationary pressures and increasing budget spending.
Inflation is expected to remain elevated, and a more gradual reduction in the budget stimulus is foreseen. The bank will maintain tight monetary conditions to bring inflation back to the 4% target by 2024. The projected annual inflation rate for 2023 is 7-7.5%, declining to 4-4.5% in 2024 and stabilising at around 4% in the following years.
The central bank has increased interest rates by a total of 750 basis points since July. This includes an unscheduled emergency rate hike in August when the value of the rouble fell below 100 per dollar, prompting the Kremlin to advocate for a more stringent monetary policy.
Russia is boosting government expenditure by channelling funds into the defence sector, with the aim of increasing military production, particularly for the war in Ukraine.
As a result of the rate hike, the rouble has strengthened by approximately 1%. The currency was quoted at 94.41 per dollar on Friday, compared to RUB 95.67 per dollar a week earlier. “This means that steel exporters are facing a 1% loss on the exchange rate,” a trader observes.
The activity of Russian exports intensified in Asia during the week. Offers of Russian slab were heard in India at $470-480/t cfr.
Evraz offered slab at $455-460/t cfr Southeast Asia/ASEAN, depending on quantity and country, translating to $435-440/t fob Nakhodka, Far Eastern port of Russia.
In Turkey, Russian slab was quoted at $460-495/t cfr, depending on the sanction position of the exporter.
As a result, Russian slab was assessed at $430-470/t fob Black Sea, unchanged from the previous week.
Saudi Arabia’s Sabic was quoting slab at $530/t in Turkey, while Malaysian slab offers to Europe were heard at $540/t cfr.
Source:Kallanish
