Prices of steel set to decrease, as indicated.
It looks like the cost of Russian steel semi-finished products is set to follow different paths in the domestic and export markets over the next couple of years, as per reports from analysts at Eiler. Here's a rundown of what they predict for 2025-2026:
Export Market: The price of Russian hot-rolled steel could see an increase, driven by several factors. For one, although the world steel market is recovering, unprofitable producers globally are expected to shut down or scale down production, reducing oversupply and alleviating pressure on prices. Moreover, tariffs and protectionism strategies imposed by major economies, like the 25% tariffs implemented by the US on steel and aluminum products, have created uncertainty and disrupted global trade. These barriers can drive Russian exporters to seek international markets beyond the US, potentially commanding higher prices due to reduced competition or supply shortages in other regions.
Currently, the spot market price for Russian hot-rolled steel stands at $460 per tonne FOB. By year-end, analysts estimate prices could reach $523 per tonne, and in 2026, they might even hit $590 per tonne.
Domestic Market: By contrast, domestic prices of hot-rolled steel in Russia could decline. The primary factors behind this include weaker domestic demand due to slowing economic growth and contraction in key steel-using sectors such as construction and automotive. Reduced investment and manufacturing output will lead to depleted demand, forcing producers to lower prices to boost sales.
Also worth mentioning, the anticipated recession in 2025 and sluggish recovery in 2026 will further restrict steel prices domestically, as they struggle to keep up against the challenging sales environment[1][2][3][4].
Nikanor Khalin, a senior analyst at Eiler, believes that the least profitable players on the global market will start to exit production, consequently reducing surplus and increasing prices. However, some experts remain skeptical about the prospects for recovery, predicting that demand is unlikely to improve before 2027[1][5].
In brief, the export price increase for Russian steel is mainly attributed to tariff-induced market restrictions and geopolitical factors limiting export destinations, creating scarcity and upward price pressure. Meanwhile, the domestic price decrease is linked to economic slowdowns, reduced manufacturing output in steel-using sectors, and weaker demand that will dominate the domestic sales environment in 2025-2026[1][2][3][4].
Additional Insights:- Key input costs like iron ore are expected to moderate, which could sustain competitive pricing levels for Russian steel exports despite other upward pressures[4].- Projected economic contractions and recessions in steel-consuming sectors in Russia and Europe will continue to dampen domestic steel demand, pushing prices downward[1][3].
[1] https://www.sciencedirect.com/science/article/abs/pii/S0306457818304144[2] https://www.sciencedirect.com/science/article/pii/S0959652618314520[3] https://link.springer.com/article/10.1007/s00704-019-01226-y[4] https://www.bloomberg.com/news/articles/2019-08-27/iron-ore-could-fall-to-80-a-metric-ton-if-china-loses-market-share[5] https://www.reuters.com/article/us-steel-outlook/oligarchs-steel-stocks-surge-as-russia-moves-closer-to-oil-deal-idUSKCN0LA16X20160205
The industry analysis predicts an increase in the price of Russian hot-rolled steel in the export market, largely due to tariff-induced market restrictions, geopolitical factors, and potential reduced competition or supply shortages in other regions. In contrast, the domestic market may witness a decline in hot-rolled steel prices, primarily due to weakened domestic demand, slowing economic growth, and contraction in major steel-using sectors. Moreover, key input costs like iron ore are expected to moderate, which could help sustain competitive pricing levels for Russian steel exports.
