The CEO Of One Of Russia's Largest Steel Companies Said That A Crisis On The Scale Of The 1990s Had Begun
- 4.09.2025, 20:12
Russian steelmakers have been hit by export restrictions.
The crisis in the Russian metallurgical industry is comparable to what happened in the 1990s. This was stated by Alexander Shevelev, CEO of Severstal, one of Russia's largest steel companies, which accounts for 14% of the country's steel production, in an interview with RBC.
Shevelev said the steelmakers have been hit by export restrictions related to sanctions, and the crisis has been exacerbated by an unprecedentedly long period of high key rates at the Central Bank of Russia.
"The deficit of finances can turn industrial enterprises into a pile of rusty metal in the long term," Shevelev warned. According to him, metallurgists have faced a sharp drop in demand, and the biggest risk the current crisis brings is a complete halt to development.
According to Rosstat, last year Russian metallurgy cut output by 1.5% despite demand from defense plants, and this year the decline has accelerated to a collapse: in June it was 10.2% year-on-year.
Magnitogorsk Iron and Steel Works, one of Europe's largest and Russia's second largest by volume, reported an 18% drop in steel production and a 9% drop in pig iron output for the second quarter. "Mechel" reported an 11% decline in sales of steel products for the half-year. Pipe Metallurgical Company (TMK), the country's largest producer of steel pipes, lost 18% of sales of steel pipes and almost 22% of sales of seamless pipes.
"Severstal" reduced steel production by 8% and pig iron by 11% last year, but this year reported an increase in output - by 8% and 35% respectively. Nevertheless, at the end of the second quarter, the company's profit fell by 55%, and cash flow became negative - minus 25 billion rubles for six months.
Because of sanctions steelmakers lost a third of exports: last year they were able to export abroad 20 million tons of products against 31 million tons in pre-war 2021.
At the same time, the consumption of metals in Russia is falling at double-digit rates against the background of cooling the economy, primarily in construction and engineering, points out analyst Freedom Finance Global Vladimir Chernov. The end of the war may also become a risk for metallurgists, as "in this case, metal consumption in the defense-industrial complex will begin to decline," Chernov notes.
Because of falling demand and expensive loans in the country, there is a risk of a complete shutdown of metallurgical plants, Shevelev said at SPIEF-2025. According to his estimates, this year steelmakers may be unable to sell up to 6 million tons of steel, or almost 10% of last year's production.