Severstal: Russian metal consumption in January-August 2026 was 16% below the 2024 level

Metal consumption in Russia fell 16% in January-August 2026 against the same period of 2024, according to estimates by Severstal reported by Kommersant. The benchmark used is 2024 rather than 2025, which points to a cumulative contraction stretched over two years rather than a single weak season. Analysts and market participants surveyed by the newspaper do not expect a visible recovery in demand before the second half of 2027.

The estimate was presented by Dmitry Maksimov, marketing director at Severstal, at the conference "Metal Products Markets: Sales, Production, Strategy". Consumption is not recovering in 2026, he said: in the first quarter it dropped to 8.5 million tonnes, the lowest level since 2021. That quarterly figure sets the scale of the problem for domestic mills, which built capacity around a construction-led demand base.

Three segments contracting at once

Maksimov attributed the weakness to a simultaneous slowdown across the main consuming sectors:

• Housing construction, where high borrowing costs and a cooling residential market are reducing steel orders.
• Machine-building, where support programmes have been scaled back and imports are pressuring domestic producers.
• Infrastructure construction, where the schedules of large projects have been pushed back and new facilities are less metal-intensive than earlier ones.

The last factor has consequences beyond the current cycle. Lower metal intensity per project means that even a full restart of the infrastructure pipeline would not restore the tonnage that the same volume of capital spending used to generate. For producers of rebar, sections and heavy plate, that changes the assumed ceiling of the domestic market, not just its timing.

Costs rising while volumes fall

Severstal also pointed to the cost side of the squeeze. Maksimov said the industry carries additional pressure from rising natural-monopoly tariffs, higher logistics expenses and growing labour costs. The combination is harder on margins than the volume decline alone: fixed costs are spread across fewer tonnes, while per-tonne freight and wage costs move the other way. Mills running below nameplate capacity absorb that gap directly.

Financing conditions appear on both sides of the equation. The high cost of borrowed funding is the first reason cited by the analysts surveyed for the delayed recovery, because it suppresses demand from developers and machinery buyers while also raising the cost of carrying inventory and working capital through a downturn.

Builders have written off the current year

Andrey Yudanov, construction director at Balchug Development, said the current year is already lost for builders and that there is no basis for counting on a recovery in demand from housing construction, according to Kommersant. That assessment matters for the sequencing of any upturn: residential projects started in one period generate steel purchases over the following quarters, so an empty 2026 order book mechanically limits consumption into 2027.

What the 2027 horizon implies

The second half of 2027 as the earliest point for a meaningful demand recovery leaves the industry with roughly another year and a half of current conditions. In that window the operating variables for Russian mills are output discipline, the share of volumes placed outside the domestic market, and cost control against tariffs and wages that are rising regardless of utilisation rates.

For distributors and service centres, the implication of the figures reported by Kommersant is that there is no restocking cycle to position for. Inventory built on an expectation of a 2026 rebound would be financed at high rates against a market still shrinking, and the segment-level explanations given by Severstal - mortgage conditions, support programmes, project timetables - are all decisions taken outside the steel industry itself.