Throughout 2025, Russia’s metallurgical sector continues to decline at a steady pace, with prospects for further deterioration becoming increasingly evident. Steel production is expected to fall to 66.5 million tons by the end of the year, down 6% year-on-year, while domestic consumption will drop 12% to 38.9 million tons. A return to pre-crisis levels is unlikely before 2027 and would require deep structural changes in the Russian economy, which currently do not appear likely.
Preliminary data for January–October 2025 confirm the deepening crisis in the ferrous metallurgy sector. Pig iron output decreased by 5.6% to 41.8 million tons, and alloy steel production dropped sharply by 15% to 11.2 million tons. Rolled products output fell by 5.3%, while production of pipes and metal structures declined by 11.9%. These figures indicate a systemic decline rather than temporary disruptions.
The key factor remains the loss of export markets due to sanctions. Before their introduction, up to 17% of Russian steel exports went to the EU, with total losses estimated at around $9 billion. Attempts to redirect exports to Asia, Africa, and Latin America have not compensated for these volumes and have further increased dependence on low-margin markets.
Additional pressure comes from tight monetary policy. Despite a reduction in the key interest rate to 16.5% in 2025, borrowing costs for businesses remain at 18–25%, suppressing demand for metal products and investment in construction and industry. Meanwhile, global steel prices are under pressure from China’s oversupply: its exports in 2024–2025 exceeded 110 million tons annually, 5–10% higher than before, leading to average price reductions of 10–20%.
Fiscal pressures exacerbate the financial difficulties of producers. The excise tax on liquid steel remains in place, while production costs—around $435 per ton—far exceed the “cut-off” price of $300 (the minimum price below which the excise is not applied). As a result, the sector faces capacity mothballing and entrenched structural stagnation.
