Russia’s metallurgy industry, long one of the country’s key sources of foreign currency revenue, is undergoing an unprecedented decline. At the St. Petersburg Economic Forum, Alexander Shevelev, CEO of Severstal, announced the possible complete shutdown of plants due to declining domestic demand, unprofitable exports, and virtually inaccessible credit, reports Baltimore Chronicle with reference to The Moscow Times.
According to Shevelev, steel producers may be left with 6 million tons of unsold steel, nearly 10% of the total production volume from the previous year. The domestic market is unable to absorb the current volumes, while exports have become nearly impossible due to economic unviability amid the current exchange rate and sanctions.
The situation is exacerbated by a combination of factors including a high key interest rate, an overvalued ruble, and limited access to financing. According to the World Steel Association, steel production in Russia fell by 7.2% between January and April 2025. In 2024, the decline reached 8.6% — a record among major global producers.
Russia’s steel exports have dropped by a third over three years: from 32 million tons in 2021 to 20 million in 2024. In 2025, domestic steel consumption is expected to shrink to 39 million tons, down from 43–45 million in previous years. This dynamic poses a particular threat to enterprises with high production costs, which may be the first to shut down blast furnaces.
The financial state of leading metallurgical plants underscores the depth of the crisis. The Novolipetsk Steel Plant ended 2024 with a net loss of 300 million rubles. The Magnitogorsk Iron and Steel Works, one of Russia’s largest steel suppliers, reported a loss of 1.2 billion rubles in the first quarter of 2025. Even Severstal, which had remained profitable until recently, reported a negative cash flow of 33 billion rubles.
Analysts at BCS are recording a steep drop in export prices: down 5% in dollar terms and 26% in ruble terms since the beginning of the year. All of this is unfolding against a backdrop of a construction sector crisis, declining business activity, and broad economic stagnation.
Earlier we wrote that Ukraine surpasses Russia in trade with Germany.