Russian Steel Industry Feels the Weight of Sanctions Despite Reorientation Attempts
Russia’s steel exports have sharply declined since 2022 as Western sanctions cut off key markets. Despite redirecting shipments to Asia and the MENA region, this shift has not offset the losses. The impact on production, export margins, and market access is growing more severe in 2025.
Production Shrinks Amid Sanctions and Weak Demand
Russian steel production dropped by 7% in 2023, reaching 70.7 million tons. In early 2025, production continued falling—down 3.8% year-over-year. Major producers reduced output, some by over 10%. This trend highlights the strain on the industry, despite efforts to adapt.
Sanctions forced Russian mills to find new buyers. However, most of these new markets demanded steep discounts—often 15% to 30%. Combined with higher logistics costs, the profitability of exports suffered. The domestic economy also failed to support steelmakers. Russia’s key interest rate stands at 21%, which stifles construction and infrastructure investment.
Exports Fail to Recover in Alternative Markets
Russia redirected exports to China, India, Turkey, and several MENA countries. Yet results fell short. Exports to China halved in 2024. India’s imports from Russia rose, but total volumes remained minor due to India’s self-sufficient steel sector.
Turkey initially increased purchases, but those volumes shrank again in 2024 as China offered cheaper alternatives. MENA countries, while politically aligned with Russia, did not absorb enough product to make up for the EU ban. Overall, steel exports fell by over 20% in 2024.
The EU Market: Sanctioned but Still Buying Semi-Finished Goods
The European Union banned many finished Russian steel products but kept quota-based access open for semi-finished goods and pig iron. By early 2025, most of these quotas were already exhausted. For now, semi-finished products remain one of Russia’s few footholds in Europe, but this lifeline could weaken as EU policies tighten.
In contrast, the U.S. market has nearly disappeared. Russian exports of steel and raw materials to the United States dropped over 90% since 2022. High transportation costs and full sanctions erased profitability.
2025 Forecast: Bleak But Stable
Looking ahead, Russia’s steel exports will likely stay weak. The Russian Steel Association expects steel demand to drop another 6% in 2025. Exports could fall by an additional 2.5%. A stronger ruble is also hurting export margins. Domestic steel prices now exceed global prices by around 15%, making Russia less competitive abroad.
Even under an optimistic scenario, 2025 will not reverse recent losses. The sector remains vulnerable to high interest rates, falling global steel prices, and intense competition from China. Until geopolitical tensions ease, SuperMetalPrice forecasts that the Russian steel industry will continue operating under pressure.
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