One of Russia’s largest steel producers, Severstal, reported a steep deterioration in financial performance amid falling domestic demand for steel.
Bloomberg reported the development.
Steel sector under pressure: falling demand, profits, and output
In Q1 2026, steel consumption in Russia dropped by 15% year-on-year, following a 14% decline in 2025. The trend signals a deepening contraction in the industry.
Key indicators show a broad downturn:
- steel prices on the domestic market fell, with hot-rolled coil down 7%;
- Severstal’s revenue dropped 19% to 145.3 billion rubles;
- EBITDA collapsed by 54% to 17.9 billion rubles;
- profitability fell to 12%, one of the weakest levels for the company in recent years.
As a result, the company reduced costs, cutting investments, staffing expenses, and maintenance spending.
Production has not yet slowed significantly, but other major players are already taking harsher measures. The Magnitogorsk Iron and Steel Works has started reducing capacity, optimizing staff, and scaling back investment plans.
Economists link the downturn to several combined factors:
- slowdown in Russia’s post-2022–2024 economic cycle;
- tight monetary policy by the Central Bank of Russia with high interest rates;
- expensive credit restricting investment and production;
- a strong ruble reducing export revenues.
Context
Metallurgy remains one of the core sectors of Russia’s economy alongside oil and gas. Its worsening performance is already affecting major industrial groups and billionaires tied to the sector.
Earlier, The Ukrainian Review reported that Russia’s oil industry has faced export disruptions due to repeated Ukrainian drone strikes, while Russia also stopped oil transit from Kazakhstan to Germany.
