Economic upheaval reminiscent of the 1990s has been officially declared by the head of a major Russian steel conglomerate

In a stark warning at the St. Petersburg International Economic Forum in 2025, Alexander Shevelev, the general director of "Severstal", one of Russia's largest steel producers, highlighted the ongoing crisis in the country's metallurgical industry.

Shevelev's concerns come amidst a prolonged period of high key interest rates set by the Central Bank of Russia, which has exacerbated the crisis. "Severstal" accounts for 14% of Russia's total steel production, and the director's remarks underscore the severity of the situation.

The president of Russia, Vladimir Putin, may take decisive measures to address the crisis. In the first half of the year, "Mechel" reported an 11% decrease in steel product sales, and Shevelev estimates that steelmakers may struggle to sell up to 6 million tons of steel this year, which is almost 10% of last year's production.

Shevelev warned that due to a decrease in demand and expensive loans, there's a risk of a complete shutdown of metallurgical plants in the country. He further emphasised that financial shortages could lead to metallurgical enterprises becoming a pile of rusty metal in the long run.

The crisis in the Russian metallurgical industry is reminiscent of the one experienced in the 1990s. Metal consumption in Russia is falling at double-digit rates due to economic cooling, particularly in construction and machine-building.

The industry has also been impacted by export restrictions related to sanctions. Due to these sanctions, steelmakers have lost a third of their exports, with last year's ability to ship 20 million tons of products abroad compared to 31 million tons in the pre-war 2021.

TMK, Russia's largest producer of steel pipes, lost 18% of its sales in steel pipes and almost 22% in seamless pipes. Magnitogorsk Iron and Steel Works reported a 18% drop in steel production and a 9% drop in pig iron production in the second quarter.

Analyst Vladimir Chernov of Freedom Finance Global notes that the end of the war could pose a risk to metallurgists, as "in this case, consumption of metals in the defense industry complex will begin to decrease."

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