According to the results of the first half of 2026, the decline in steel consumption in Russia began to slow down. According to Severstal’s assessment, the industry is supported by government programs and the implementation of major infrastructure projects, but it is too early to talk about the beginning of a sustainable recovery.
At the same time, the volume of domestic consumption remains significantly lower than last year’s level, which indicates the continued unfavorable economic situation in the metallurgical industry.
Key indicators of the steel market
In the first six months of 2026, domestic steel consumption decreased by 7.5% year-on-year, amounting to about 18.3 million tons. At the same time, the decline slowed to 3.5% in the second quarter. Against the background of the start of the construction season and low stocks among metal traders, average quotes for hot-rolled rolled products in the second quarter increased by 3% compared to the first quarter, and within the period the growth reached 6%.
Manufacturers’ results on the example of Severstal
Despite the general reduction in the market, PJSC Severstal maintained capacity utilization at a level close to 100% and increased sales volumes. The company’s financial results remain under pressure from lower prices for metal products and an increase in the share of semi-finished products in the sales structure.
In particular, the company’s net profit for the first half of the year decreased by 89%. The negative value of free cash flow due to weak demand and the implementation of a large-scale investment program was the reason for the company’s refusal to pay dividends for the reporting period.
Analyst estimates and macroeconomic factors
Financial sector experts are cautious in their assessments of the medium-term prospects of the market. According to analysts, a sustained market recovery is possible only after the key rate is lowered below 12%, which is expected no earlier than the fourth quarter of 2027.
External economic factors exert additional pressure on the industry. Export markets remain highly competitive due to stable supplies from China. In addition, the strong ruble exchange rate not only reduces the profitability of Russian metallurgists’ export operations, but also stimulates import growth in the domestic market, especially in the regions of Siberia and the Far East.
Forecasts and prospects of the steel market
Weak demand and stagnation in the Russian steel market remain the most likely scenario until the end of 2026. According to analysts, domestic consumption may be 6-7% lower than last year’s level. Further market dynamics will depend on the rate of reduction of the Bank of Russia’s key rate, the state of investment activity in construction and industry, as well as the situation on export markets and the ruble exchange rate.