Russia's steel industry on the brink: 600,000 jobs at risk!

Russia's steel industry on the brink: 600,000 jobs at risk!

There is a lot of turmoil in the Russian steel industry: the industry is in a serious crisis that is not only driving down production figures, but also endangering thousands of jobs. Mercury reports that production cuts and threatened factory closures at leading manufacturers such as Alexander Shevelev's steel producer are becoming increasingly tangible. By the end of 2025, production could fall by up to six million metric tons of steel, roughly a tenth of 2024 output.

Another setback for the industry is the decline in domestic consumption. Forecasts paint a bleak picture: demand could fall from the current 43-45 million tonnes to 39 million tonnes. This is particularly worrying for the approximately 600,000 people who work in the steel industry, which generates about ten percent of the country's export revenue, he said The market.

The causes of the crisis

High key interest rates of a whopping 20.0 percent and a strong ruble pose significant challenges for companies. These factors made the export of steel unprofitable, which further inflamed the situation. Fr.de reports that steel exports have plummeted. In 2023, exports fell to 11.6 million tons, a decline of 27 percent compared to the previous year.

A look at the past few years shows that exports fell by a total of 22.3 percent between 2015 and 2023. Russia's position was particularly striking in 2017, when the country was considered the third largest steel exporter in the world with an export volume of 33.3 million tons.

The political reaction

Given this worrying outlook, Kremlin leader Vladimir Putin is calling for a cut in key interest rates to stabilize the economy. However, the last adjustment in June 2023 was rather minimal and did not defuse the dilemma. In addition, inflation of 9.9 percent means that consumer sentiment continues to suffer.

The government outlines potential tax relief and regulatory adjustments to support the steel industry. But the question remains open as to whether sufficient financial resources are available for truly effective relief measures. The tense situation could unsettle not only the industry itself, but also the entire Russian economy, two senior officials warn.

The steel industry is facing a profound upheaval. Companies must adapt strategically to get back on their feet. But the future remains uncertain and many workers are facing an uncertain future. Stability is needed now - but on the way there it is important not to further diminish your own resources.