Russian steel outlook

Export prices for Russian hot-rolled coil are expected to gain momentum through 2025 and 2026, driven by the phase-out of inefficient producers in the global market and a gradual recovery in international demand. Current spot prices stand at around $460/t FOB, with projections suggesting an increase to $523 by the end of this year and potentially up to $590 in 2026.

In contrast, domestic prices are forecast to fall from their current level of $638/t to approximately $543 by year-end, and hover near $550 in 2026. This shift reflects a narrowing internal premium, which has long been supported by Russia’s relative market isolation and high degree of industry consolidation. As the ruble weakens and global pricing mechanisms regain influence, the domestic advantage appears to be diminishing.

The gap between domestic and export steel prices in Russia is expected to narrow in the coming years. In the past, steel sold at a higher price inside Russia compared to the international market, mainly because the domestic market was protected by sanctions and dominated by a few large producers who could keep prices high. But this price advantage is starting to fade. As the ruble weakens and the global steel market slowly recovers, the difference between domestic and export prices will likely shrink, reducing the ability of Russian mills to charge more at home.

The adjustment in domestic pricing is also tied to currency fluctuations. A weaker ruble tends to widen the gap between domestic and export markets. But in the current environment, the impact is more complex, as global buyers return and the ruble declines, the local premium is expected to shrink further, reducing the pricing power of Russian mills within the country.

At the same time, the global steel market is seeing signs of a correction in supply. Non-integrated producers, especially in Asia, are being squeezed by persistent losses. Production cuts are already underway in several regions, and with China aiming to reduce its output by 2–5% this year, global oversupply may begin to ease. This, in turn, creates upward pressure on export prices, particularly for cost-competitive suppliers like Russia.

However, the outlook remains mixed. While some indicators point toward recovery, broader demand is not expected to fully return until 2027 or later. Growth in global steel consumption is projected to remain modest, while new production capacities scheduled to come online in 2025–2027 may exacerbate existing excess.

Trade protectionism is also becoming a more prominent factor. Barriers in key regions are distorting price parity across markets, creating wide gaps between local and international prices. For example, hot-rolled coil in Europe is currently priced 50–60% higher than in China, and U.S. prices are more than double, highlighting the fragmentation that now defines the global steel landscape.

In such conditions, traditional forecasting becomes increasingly unreliable. The market continues to be shaped by weak demand, falling raw material costs, and an oversupplied system. Any significant upward shift in pricing, either domestically or globally, will likely require a major disruption or unforeseen event to reset expectations.

For now, Russian producers must prepare for a more complex pricing environment, one where growth in exports may no longer compensate for a weakening domestic position. As market forces rebalance, pricing power will depend not only on cost and currency advantages, but also on the ability to adapt to an increasingly segmented and protectionist global market.