MOSCOW (Realist English). The Russian steel market showed paradoxical dynamics in July 2026: despite falling production and demand, metal product prices continued their steady rise.
Over the month, the consolidated price index for ferrous rolled metal in Russia’s Central Region rose by 9.58%. However, this growth reflects not a recovery in demand, but rising costs and temporary supply factors.
Production falls for the second consecutive year
The industry continues to contract. According to the “Chermet Corporation,” steel production in the first half of 2026 fell by 6.7% to 32.3 million tonnes, while finished rolled products dropped by 5.1%. The pipe industry is particularly concerning: pipe output fell by 23% in the first half of the year.
In June, steel and rolled product volumes showed a slight increase compared to May, but annual dynamics remain negative. According to Rosstat, metallurgical production overall contracted by 3.4% year‑on‑year.
As SteelRadar analysts note, “the June production data confirms that the Russian steel industry remains under structural pressure, despite some improvement compared to May.”
Demand contracts, but the pace of decline slows
Metal consumption in Russia in the first half of 2026 fell by 7.5% year‑on‑year. However, there is a reassuring sign: in the second quarter, the rate of decline slowed to 3.5%.
“Most likely, this does not indicate a recovery, but rather that the market has reached a level where further contraction has become limited,” SteelRadar notes.
Severstal CEO Alexander Shevelev had previously forecast a 7–9% drop in steel demand in 2026. In July, the company confirmed this forecast, noting that if the current macroeconomic situation persists, “a gradual stabilisation of domestic steel demand” can be expected in the second half of the year.
The main constraining factor is tight monetary policy. High interest rates continue to hold back investment in construction, engineering and the oil and gas sector. Analysts do not expect significant rate cuts before the end of 2027.
Prices rise against all logic
Despite falling demand, steel prices are rising steadily. In June, the average price per tonne of steel in Russia was 47,300 roubles. In the first half of the year, prices fell 9% year‑on‑year, but in the second quarter they rose 3% compared to the first.
Key drivers of price growth in July:
- Coking coal rose by 21–31% over the month. Export prices for grade Zh coal rose almost 60% year‑on‑year. Producers redirected volumes to exports, creating a shortage in the domestic market.
- Scrap metal rose by 29% in July – to 21,500 roubles per tonne, the highest level in the past year. Year‑on‑year, scrap gained 39%.
- Hot‑rolled coil rose by 6% in the second quarter amid local shortages.
Metallurgical companies raised quotations by 7,000–8,000 roubles per tonne for certain products in July and intend to repeat the increase in August.
According to MetalTorg.Ru, as of 23 July, the consolidated metal trading price index reached 936.47 points.
Exports: pressure from Turkey and Asian producers
The export situation remains challenging. The Turkish market, key for Russian semi‑finished products, has virtually stopped purchases after European quotas were exhausted. Under pressure from Turkish and Asian producers, Russian mills were forced to cut export prices for steel billets.
However, there are positive signals: in July, Russia significantly increased exports of iron and steel to Brazil – nearly 12 times, to $75.3 million, a three‑year record.
‘Bottom’ is near, but recovery is far off
Market participants increasingly believe that 2026 may be the bottom of the current cycle. However, any recovery will depend on a substantial reduction in interest rates.
Severstal notes “some revival in the construction sector, supported by infrastructure projects and government programmes.” Demand is mainly concentrated in government infrastructure projects – railway modernisation, high‑speed highway construction, energy infrastructure and pipelines.
As the analytical service of the IIS “Metallosnabzhenie i sbyt” notes, “negative trends generally persist on the Russian steel market, but the situation has improved slightly compared to the end of July.”
The Russian steel market finds itself in a paradoxical situation: prices rise amid falling demand and production. The drivers of growth are costs – coal, scrap, logistics. However, the risk of a correction remains: analysts expect that the rise in raw material prices may lose momentum, and global coking coal prices have already begun to soften.
The key question is when the key rate will begin to decline. Without this, neither construction nor engineering will be able to restore investment activity. For now, the industry is frozen in anticipation: the bottom of the cycle may already be close, but the recovery, according to experts, will not begin before 2027.
