Posted on 16 Dec 2025
Russia’s steel industry remains in one of the most protracted crises in its history, with steel production in 2025 set to drop to 66.5 million tonnes and consumption to 38.9mt, says the Russian Steel Association.
According to them, the situation is exacerbated by low export profitability and sanctions pressure on Russian producers. “The industry is insisting on a revision of the excise tax on liquid steel and a reduction in the tax burden, as well as the need for government support for consumers and easing monetary policy,” the association notes.
Experts predict that only a slight recovery is possible in 2026, and it may take years to reach pre-crisis levels, Kallanish notes.
“Russia’s ferrous metallurgy industry is operating under rapidly deteriorating macroeconomic conditions and prices have plummeted to 11-year lows, while the cost of all production factors is steadily rising,” Kommersant cites the Russian Steel Association as writing in a recent letter to First Deputy Prime Minister Denis Manturov. “Even the most efficient plants are starting to record negative cash flow, despite the required 15% profitability to maintain production programmes and the investment cycle.”
Russian Steel did not reply to Kallanish request for comment before deadline.
The association requested that the Ministry of Finance, the Ministry of Industry and Trade, and the Ministry of Economy prepare and submit to the Russian government a bill amending the tax code to increase the "cutoff price" for calculating the liquid steel excise tax. They are seeking a cutoff of RUB 43,470/tonne ($548), effective 1 April 2026, with annual indexation based on inflation.
The current "cutoff price" of RUB 30,000/t has ceased to fulfil its purpose, as the cost of slab production already exceeds RUB 40,000/t, the association explains.
Several Russian steelmakers have confirmed the meeting and the contents of Russian Steel's letter. Russian authorities declined to comment.
Earlier, the Russian Steel Association said Russian steel demand will decline 14% on-year in 2025 and may decrease to its lowest tonnage since 2016, when the figure was 39mt.
Severstal said it expects steel consumption in Russia in 2025 will decline due to tight monetary policy having an adverse effect on business activity amid high interest rates.
The Bank of Russia decided to reduce the key interest rate to 16.5%, from 17%. However, this is considered insufficient to spur a steel demand recovery.
Steel demand recovery in Russia is possible if the key interest rate is reduced to 12%, Severstal noted. Steel capacity closures could occur if the situation does not improve. At the same time, competition from imports is growing in the market, in particular, from Kazakhstan and China.
Source:Kallanish
