According to Rosstat, Russian crude steel output in Q1 2025 dropped by 3.8% year-on-year to 17.7 million tonnes. In March alone, the decline was 4.7%, totaling 6.1 million tonnes. For all of 2024, production decreased to 71 million tonnes. Analysts attribute this downturn to falling global steel prices, reduced domestic demand caused by high key interest rates, and a stronger ruble.
Data from the World Steel Association (WSA) shows that global steel production in Q1 2025 fell only slightly — by 0.4% to 468.6 million tonnes compared to the same period last year. Production declined in major steel-producing countries like Russia, Japan, the U.S., South Korea, Germany, Türkiye, and Iran by 5.2% to 98.4 million tonnes. This was offset by growth in China (up 0.6% to 259.2 million tonnes) and India (up 6.8% to 40.1 million tonnes).
The WSA has postponed its April 2025 global steel demand forecast due to uncertainties caused by the new 25% U.S. import tariff on steel, introduced in February.
According to Boris Krasnozhenov, Head of Securities Market Analytics at Alfa-Bank, Chinese exports continue to pressure global prices. In early April, hot-rolled coil prices on the Shanghai Futures Exchange fell to $440 per tonne, pushing prices in most markets, except Europe and the U.S., to mid-2000s levels.
Before 2022, around 40% of Russian steel production was exported. That figure has since dropped significantly due to weak global prices and logistical challenges. For example, MMK used to export 10–15% of its output, now it exports no more than 10%. Severstal exports 10–15%, while NLMK, which has not been sanctioned, does not disclose its export volumes.
Historically, about 25% of Russia’s steel output was exported each month. But prices are now near unprofitable levels. The cost of producing 1 tonne of rolled steel is around $400, while export prices need to exceed $500 per tonne for producers to break even. Current prices plus logistics expenses bring profits close to zero. Additionally, the ruble's appreciation and oversupply of Chinese steel further undercut Russian exports.
In January–February 2025, Russian ferrous metallurgy exports fell by 10% year-on-year to 1.3 million tonnes. Prices for hot-rolled steel sheets have fallen by $150 per ton since the beginning of 2024 in Russia. The cost of producing a slab is 33,000 rubles per ton, or $330 at an exchange rate of 100 rubles per dollar. At an exchange rate of 85 rubles per dollar, the cost will be $388 per ton. Thus, strengthening the ruble from 100 to 85 rubles per dollar leads to an increase in the cost by $58 per ton.
According to Severstal, domestic steel consumption in Q1 2025 declined by 13% year-on-year. Based on the company’s 2024 estimate of 10.9 million tonnes consumed in Q1, current consumption stands at about 9.48 million tonnes.
Nikita Klimantov, Severstal’s Head of Investor Relations, stated during a SberCIB webinar that the high Central Bank rate significantly reduced demand in construction and machinery sectors. Many metal traders now store inventory in hope of future retail demand, but expensive credit has made this approach unviable.
Independent expert Leonid Khazanov confirmed that demand from construction and engineering is falling. New housing projects are slowing down, and industrial and commercial construction is stagnating. Automotive and equipment manufacturing are also experiencing reduced steel usage.
According to Severstal's 2024 report, overall domestic steel demand fell 6% year-on-year to 43.8 million tonnes. Construction demand fell 6% to 33.8 million tonnes, energy demand fell 11% to 4.9 million tonnes, while engineering demand grew 4% to 5.1 million tonnes. Of the 70.7 million tonnes of steel produced in Russia in 2024, 47.8% was consumed by construction, 6.9% by energy, and 7.2% by machinery.
Evraz Steel reports that the number of new housing projects started in Q1 2025 fell by 24%. However, infrastructure and industrial construction held steady due to the long cycles of ongoing projects. A stronger ruble also risks increasing steel imports from China, especially to Russia’s eastern regions, where transportation costs are lower.
Evraz clarified that in the past five years, imports of structural steel from China to Russia were negligible. But the combination of weak Chinese domestic demand and a strong ruble makes Chinese steel increasingly attractive, posing a new threat to local producers.
According to Dmitry Skryabin from Alfa-Capital, the steel industry is in a phase of "compression" not full-blown recession, but slower growth and shrinking margins. The Central Bank's high rates, low construction demand, and cautious buyers are creating a prolonged downturn.
Evraz has paused one of its three blast furnaces and closed one of two BOF shops at its West Siberian plant due to falling export shipments. Krasnozhenov from Alfa-Bank links this to declining investment activity and limited funds among buyers. The strong ruble is worsening exporters’ price sensitivity.
Evraz’s market development director Dmitry Yeremeyev says many construction projects are still at the planning stage. A signal from the Central Bank to lower rates could unlock activity. If not, slow but steady production cuts will likely continue due to financing difficulties.
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