As Oil Nosedives so Does the Ruble
It's a near-perfect correlation
This article originally appeared at Zero Hedge
The Russian Ruble is re-crashing again today (higher by 3 handles and back above 66 RUB to the USD) as crude oil continues to plumb new depths.
Having found some strength - via intervention amid 'stability' in crude prices in late December - the selloff since Christmas has been dramatic in both the Ruble and Crude.
However, the contagious impact of this massive Ruble devaluation is, as Bloomberg reports, making life tougher for India's steelmakers.
Ruble re-crashes as crude carnage continues
As Bloomberg reports, the rout in Russia’s ruble is making life tougher for Indian steelmakers...
Some local buyers are turning to Russian alloy instead after the past year’s 49 percent plunge in the ruble -- the world’s steepest -- made the nation’s exports cheaper.
“In the past month or so, deals have been struck for steel imports from Russia,” said JSW Steel’s Mumbai-based Senior Vice President Sharad Mahendra, referring to users and traders of the alloy. Such purchases “will only increase,” he said.
India’s overseas markets such as the Middle East also may turn to more Russian steel, adding to existing competition from Chinese shipments.
Russian companies can offer discounts on the Indian hot rolled steel price, which is $550-$600 a ton, said Mumbai-based Niraj Shah, founder of steelanalyst.com, who specializes in Russia and India.
“Apart from shipping steel to India, Russia will also look to sell to markets where India exports,” Shah said, adding sanctions are discouraging demand in parts of Europe. The first Russian steel may arrive in India next month, he said.
And this is a problem as expectations for India's steel industry are high...
Indian steelmakers raised output targets for the year ending March 31, 2015. Modi made higher investment and better infrastructure key priorities after sweeping to office in May. His government plans to make India a global manufacturing hub.
Domestic steel producers may have to “lower prices if they want to sell more,” according to New Delhi-based A.S. Firoz, chief economist at the Steel Ministry’s economic research unit....
“This will be a threat to Indian steel mills,” he said.
India’s total imports of the alloy exceeded 6.5 million metric tons in the nine months through December. That’s 1 million tons more than the year ended March 31, 2014, official data show.
The nation may become a net importer of 3 million tons after being a net exporter last year
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It's a non-linear world after all...
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