Devaluation of the Ukrainian currency is a boon for the owners of steel plants in Ukraine

Ukraine has recently been at the epicenter of the storm due to political and economic instability. It is known that the EU countries froze the assets of the former president due to allegations of corruption. The anger of European and global financial institutions has led to a tightening of lending to the economy.

The political turmoil had economic implications for the hryvnia, which lost substantially within a month. The National Bank of Ukraine (NBU) intervened in the amount of UAH 4 billion. for banks, which caused an increase in the exchange rate. However, it is unlikely that the currency will last long after the NBU depletes its reserves. And it won't be surprising if the growth becomes irreversible. As expected, the rate will be 1 USD = 12 UAH.

Ukraine was primarily an export hub for steel products, with steel exports accounting for 76 percent of the total. Semi-finished products from Ukraine ruled the show in the Middle East and Europe. It is not surprising that the cheaper national currency will be a boon for the owners of these factories, who bear production costs in local currency, while exports will be realized in dollars.

According to expert estimates, steel mills in the production of billets were able to save about USD 104-116 per tonne. This gave them a great price advantage in the export market. Billets had price levels in the region of $ 485-490 per ton.

Of course, factories shipping products across the Black Sea will have advantages over others, but the question of how far they go remains open, as demand continues to be sluggish. The marginal price reduction will be in the range of 10-20 dollars per ton in the short term.