MOSCOW (Realist English). Russia’s metallurgical industry in 2026 is experiencing one of its deepest crises in the past two decades.
Sanctions pressure, the disruption of logistics chains, a collapse in domestic demand, and the closure of most export markets have pushed steel and rolled steel production in Russia to its lowest level since 2009.
The head of Severstal has called the situation a “protracted crisis,” while industry experts state that metallurgy has shifted into survival mode.
Ferrous Metallurgy: Steel at 2009 Levels
In the first half of 2026, steel production in Russia fell by 6.7% year‑on‑year to 32.3 million tonnes. In the first quarter, the decline was even steeper — 10.4% year‑on‑year, to 15.6 million tonnes.
Finished rolled steel production in January–June decreased by 5.1% to 28.7 million tonnes. In May 2026, the metallurgical production index in Russia fell by 12.8% compared to May 2025.
The most dramatic situation is in the pipe industry. Steel pipe production in the first half of 2026 fell by 23% year‑on‑year to 4.3 million tonnes. In January–April, the drop was 24%. Capacity utilisation in ferrous metallurgy fell to 64% in the first quarter of 2026.
Iron ore mining in the first half of the year fell by 5.5% to 51.3 million tonnes. Pig iron production fell by 6.1% to 24.2 million tonnes.
Non‑Ferrous Metallurgy: First Decline Since 2021
Non‑ferrous metallurgy also saw a production decline for the first time since 2021. The sharpest drops were recorded in silver, zinc, and magnesium alloy production.
The number of investment projects in non‑ferrous metallurgy since the start of 2026 has fallen by 77% — only 43 projects worth 135.9 billion roubles have been launched. Most of them (74.6%) are related to the development of gold deposits, indicating a shift in investor focus toward precious metals.
The leaders in investment volume are the Far Eastern Federal District (75.8 billion roubles), the Urals Federal District (31.5 billion), and the Siberian Federal District (19 billion).
At the same time, Nornickel forecasts production growth in 2026–2028 of 20,000 tonnes for nickel, 41,000 tonnes for copper, and 13 tonnes for platinum group metals. The Samara Metallurgical Plant has begun designing a new cold‑rolling complex with a capacity of 100,000 tonnes.
Collapse in Domestic Demand and Export Collapse
The main cause of the crisis is the sharp drop in domestic demand. In 2025, domestic steel consumption fell by 14% , and in the first quarter of 2026 by another 15%. Since 2024, the total decline has amounted to one‑third.
Steel exports fell from 31 million tonnes in 2021 to 20 million tonnes in 2024–2025. The closure of most export markets, caused by sanctions restrictions and the breakdown of traditional logistics chains, has deprived the industry of key sales channels. The result is oversupply and falling prices.
The financial position of enterprises is worsening. The Novolipetsk Metallurgical Plant posted a loss of 5.9 billion roubles in the first quarter of 2026 — nearly five times greater than in the same period last year.
Global Context: Prices Recover as Chinese Exports Decline
Against the backdrop of the Russian downturn, global steel production in the first quarter of 2026 fell to its lowest level in six years. However, excluding China, it rose by more than 3%.
Steel prices have begun a gradual recovery. Hot‑rolled coil on a FOB China basis traded at $500 per tonne in mid‑May 2026, up from $445 at the start of the year. The average price of hot‑rolled coil from Russian producers in April was $611.
The spread between hot‑rolled coil and raw materials on the global market rose by 8% in April compared to March, to $174 per tonne, indicating improved profitability of steel sales in export markets.
Industry Support Initiatives
On July 19, LDPR leader Leonid Slutsky stated that the state must procure metallurgical products exclusively from Russian producers. In his view, under conditions of external pressure, foreign procurement is unacceptable, and every rouble from the federal budget should work to strengthen national industry.
Slutsky proposed reforming the public procurement system: “Guaranteed demand through public procurement will ensure stable capacity utilisation and allow enterprises to look to the future with confidence.”
At the Metallurgical Summit “Russian Steel: Growth Strategy” in June 2026, representatives of the Ministry of Industry and Trade stated that the main vector for metallurgy development is “improving process efficiency, product quality, and reducing costs.” Of particular importance, they said, is productivity growth.
Forecasts and Prospects
Analysts at RIA Rating believe that in the second half of 2026, production dynamics in the metallurgical sector may improve due to the low base effect, deferred demand, monetary policy easing, and the expected weakening of the rouble. However, the full‑year result will remain negative, with production volumes falling to multi‑year lows.
Long‑term forecasts are more optimistic. Steel production in Russia, according to analyst estimates, will gradually increase from 2026 and reach 78 million tonnes by 2035, 8% above the previous year’s output. In 2026, the figure is expected to be 70 million tonnes (+9% from 2025), with more moderate growth in 2027–2028.
Metal structure production in Russia from 2025 to 2030 could increase by 10.3% to 9.6 million tonnes, and steel construction rolled products and wire rod by 22.3% to 20.8 million tonnes.
The recovery of the economy following the destruction in Donbas will contribute to the growth of domestic demand.
