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According to Alexander Shevelev, CEO of Russian LR/AH40 steel giant Severstal, in an interview with the Russian media "International News Agency" on June 24th, due to the significant decline in domestic construction industry demand, it is expected that the overall demand for Russian steel will decrease by 10% year-on-year in 2025, reaching 39 million tons, far below the current annual production capacity level of over 75 million tons.
Among them, steel consumption in the LR/AH40 steel construction industry is expected to decline by 14% year-on-year, which is the main support for steel consumption in Russia. Shevelev pointed out that in the absence of export market support, most steel mills will be forced to reduce production, and some steel companies have begun to suspend some production lines.
In terms of exports, Russian steel mills are currently facing three pressures: firstly, the appreciation of the ruble and the high interest rate environment maintained by the central bank to curb inflation have made Russian steel lose its price competitiveness in the international market; Secondly, international sanctions restrict access to the market, and some steel companies are included in the sanctions list and unable to enter neighboring markets; Once again, due to the global increase in shipping costs, the transportation cost of exporting steel remotely is too high and almost unprofitable. Shevelev pointed out that under the combination of multiple unfavorable factors, Russian steel mills are facing the situation of "having to reduce production", and the reduction in production may be as high as 15%. Some production capacity may face the risk of permanent shutdown.
In the current economic and policy environment, the Russian steel LR/AH40 steel industry is undergoing a new round of structural adjustment, and its future development may rely more on major domestic infrastructure investment and industry integration efficiency improvement.
