Infrastructure and industrial projects provided some support, but this was not enough to offset the slowdown in residential construction and commercial real estate. As a result, steelmakers continued to rely heavily on exports, where competition intensified, and buyers remained cautious.
The export environment became more challenging during the month. The price support created by tensions in the Middle East gradually weakened as supply concerns eased and buyers returned to waiting for lower prices. Turkish mills delayed purchases because of falling scrap prices, while Chinese suppliers continued to compete aggressively in key export markets. At the same time, the strong rouble reduced Russian exporters' ability to lower offers without sacrificing profitability.
The domestic construction sector remained the weakest part of the market. High interest rates continued to delay new investment, while expensive financing discouraged developers from launching residential projects. The introduction of stricter fire safety regulations also increased construction costs for steel-frame buildings, making high-rise residential projects less attractive.
Government-funded infrastructure remained the main source of demand. Large transport projects, utility modernization, and industrial investments continued to generate orders for structural steel. Demand for warehouses and industrial facilities was more stable than in the residential sector, while modular construction projects, including schools, sports facilities, and temporary accommodation, continued to expand.
Market participants also expect the current environment to accelerate consolidation within Russia's steel construction industry. Large integrated producers remain in a stronger position thanks to their control over raw materials, rolling capacity, and fabrication facilities. Smaller regional fabricators continue to benefit from shorter delivery distances and subcontracting opportunities, but tighter certification requirements, limited access to financing, and weaker margins are expected to force many companies to specialize in niche products or become acquisition targets over the next several years.
Competition from Chinese manufacturers remained another challenge during June. Chinese suppliers continued offering steel structures at prices well below those of Russian producers, especially for large commercial and infrastructure projects. Russian companies are increasingly focused on customized engineering solutions, projects requiring specialized technical expertise, and applications where quality standards provide a competitive advantage. However, in standard products and large-volume orders, Chinese suppliers maintained a clear price advantage.
The export market for semi-finished steel products softened during June. Russian billet prices declined to around $480-485/t FOB Black Sea by the third week of the month after reaching nearly $500/t FOB earlier this year. Turkish mills remained reluctant to purchase new cargoes because scrap prices continued to fall and finished steel demand showed little improvement. Most buyers preferred to postpone purchases in anticipation of more attractive offers.
Russian exporters reduced prices in an effort to attract buyers, but the stronger rouble and relatively firm domestic scrap prices prevented deeper discounts. Chinese billet suppliers also lowered their offers, increasing pressure on Russian material in Türkiye. Meanwhile, Iranian billet exports gradually returned to the market toward the end of June, reducing concerns about supply shortages that had supported prices earlier in the year.
The pig iron market was considerably more stable than the billet segment. Average export prices remained close to $374/t FOB during June, showing only minor changes compared to May. Russian suppliers initially maintained offers at $375-380/t FOB before lowering prices slightly during the middle of the month. Even so, the adjustment remained limited because export availability was restricted and suppliers showed little willingness to offer substantial discounts.
Demand from Turkish buyers stayed weak throughout June. Most mills continued monitoring scrap prices before making purchasing decisions, leaving pig iron trading activity at a low level. Large export cargoes were largely absent, while suppliers shifted most offers toward August shipments by the end of the month. Only a limited number of smaller transactions were concluded during the period.
Weak domestic consumption continued to increase the importance of exports for Russian steelmakers. Russia remained one of Türkiye's leading suppliers of semi-finished steel products during the first half of the year, although trading activity slowed considerably during June. Exporters also continued to face higher logistics costs and sanctions-related restrictions, reducing their competitiveness in several overseas markets.
The Russian pipe sector also remained under pressure. Demand from construction, manufacturing and several industrial sectors stayed weak, leaving many producers with excess capacity and lower profitability. Competition remained intense, encouraging companies to focus on inventory management, cost optimization, and additional services to maintain sales volumes.
Despite the current challenges, industry participants expect infrastructure spending and energy projects to provide some support during the second half of the year. Planned investments in municipal infrastructure, pipeline construction, and oil and gas projects are expected to generate additional demand for steel pipes, although total consumption is still forecast to remain below previous peak levels.
Overall, Russia's steel market is expected to remain difficult in the coming months. High financing costs continue to limit domestic demand, leaving infrastructure investment and industrial projects as the main sources of consumption. Export performance will largely depend on demand from Türkiye, scrap price movements, competition from Chinese suppliers, and geopolitical developments affecting global trade. At the same time, the strong rouble and intense competition in export markets are likely to keep pressure on producers' margins throughout the third quarter.
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