The metallurgical industry is one of the key sectors in the Russian economy. It provides raw materials for many other industries, including construction, mechanical engineering and energy.
In 2023, the Russian metallurgical industry has shown its resilience and ability to adapt to changing conditions. The largest manufacturers and metal traders have managed not only to maintain their positions, but also to find new opportunities for growth. Despite many challenges, including geopolitical tensions and market changes, these companies continue to develop, innovating and expanding their markets.
Rating of Russian metal producers
There are 2,900 organizations operating in the metal production market with a total revenue of 6.34 trillion rubles. At the same time, it is quite concentrated: 5 largest companies occupy 50% of the market, 18 largest companies — 70%, and 78 companies — 90%.
Figure 1. Top 5 largest metal producers by revenue in 2023, mln tons.
Source: Spark Data Company
The market leader is PJSC MMC NORILSK NICKEL with revenue for 2023 of 8.77 billion rubles. The company holds a 13.84% market share in terms of revenue.
The top five also includes NLMK PJSC with revenue of 6.99 billion rubles and a share of 11.03%, as well as SEVERSTAL PJSC slightly lagging behind it in revenue with revenue of 6.87 billion rubles and a market share of 10.85% and MMK PJSC with revenue of 6.65 billion rubles and a share of 10.49%.
URAL MINING AND METALLURGICAL COMPANY closes the top five metal producers with revenue of 2.87 billion rubles and a market share of 4.54%.
Rating of Russian metal traders
According to the data of the Unified State Register of Legal Entities, there were 4,371 operating companies in Russia with the main activity related to metal trading, with a total revenue of 1,718 trillion rubles.
Unlike metal producers, where the top five companies occupy 50% of the market, and 10% of the largest companies have revenue of 97.3%, the metal trader market is less concentrated: the top five occupy 33.4%, and the top 10% of the largest companies have revenue of 90.1%.
The leader of the metal trader market is JSC SIC with revenue of 162.2 billion rubles and a market share of 9.44%. The second place is occupied by SINARASTROYKOMPLEKT LLC with revenue of 149.9 billion rubles and a share of 8.72%. EVRAZ MARKET JSC is also among the top three with revenue of 111.3 and a share of 6.48%.
Figure 2. Top 5 largest metal producers by revenue in 2023, mln tons.
Overview of the steel market in Russia
The dynamics of steel production in Russia from 2018 to 2023 is characterized by significant changes caused by both internal and external factors.
Figure 3. Steel production volumes in Russia, mln tons.
Source: World Steel Association
In 2018, the volume of steel production in Russia amounted to about 71.7 million tons, which was at the level of previous years. The production of ferrous metals (carbon steel) remained the main focus, providing about 85% of the total volume.
The volume of production in 2019 amounted to a similar value of 72 million tons, after which it decreased to 70.4 million tons in 2020. In 2021, it began to grow again following the gradual recovery of the global economy, amounting to about 77 million tons, which exceeded the level of previous years.
In 2022, the volume of steel production in Russia has significantly decreased to 71.5 million tons. The decrease was about 7.2% compared to the previous year. Among the reasons:
- The introduction of European and American sanctions. In particular, European and American markets have become significantly restricted for Russian exporters.
- The disruption of logistics chains and the complication of trade.
- Increased transportation costs and the inability to obtain the necessary components for metallurgical production.
- A decrease in domestic demand due to economic difficulties and a decrease in investment activity in Russia.
The year 2023 was a year of adaptation to new environment - the volume of production has significantly recovered, amounting to 75.8 million tons. The main reason was the gradual recovery of domestic demand, despite external constraints:
- Ongoing sanctions pressure, the need to restructure export flows from West to East (to Asia and the Middle East).
- The increase in steel production costs due to restrictions on the import of technologies and equipment.
- Over the past year, carbon steel (ferrous metallurgy) has remained the dominant direction, providing up to 85-90% of total production. The main changes were due to a decrease in demand for it due to a global slowdown in the growth of industry and construction.
Stainless steel production remained stable despite the overall decline. Russia maintained a fairly strong position, although in 2022-2023 difficulties were noticed with the import of alloying additives and technologies.
Dynamics of domestic steel prices in the Russian Federation
Figure 4. Average steel prices, RUB/ton
Source: Rosstat
Overview of the cast iron market in Russia
Cast iron, being the most important raw material for steel production, experienced similar fluctuations in production volumes.
Figure 5. The volume of cast iron production in Russia, million tons.
Source: Rosstat, Delovoy Profil calculations
In 2023, cast iron production in Russia amounted to a record 54.6 million tons. The factors that influenced the market were:
- Recovery of domestic demand for cast iron in some sectors (e.g. construction) despite limited exports.
- Restructuring of domestic supply chains and introduction of new technologies to improve production efficiency.
- Continued sanctions pressure, but Russian steelmakers have started to actively develop new markets, particularly in Asia and Africa.
Blast furnace cast iron remains the main type of cast iron produced in Russia, its production has generally consistently followed general trends. In 2022-2023, taking into account the sanctions, the export of blast furnace cast iron decreased, especially towards the EU countries.
High-quality cast iron made up a small part of the total production. It remained in demand in the domestic market, although production also decreased in 2022-2023 due to a decrease in investment activity in the industry.
Dynamics of domestic cast iron prices in the Russian Federation
Figure 6. Average prices for mirror and converted cast iron in castings, billets or other primary forms, RUB/tn
Source: Rosstat
Trends and challenges of metallurgy development
Russian metallurgy has been undergoing significant changes in recent years, caused by both internal and external factors. In 2023, there are several key trends that determine the development of this sector.
An increase in domestic demand. According to the Ministry of Industry and Trade of Russia, domestic demand for metal products in 2023 increased by 10% compared to 2022. This is due to the active development of the construction sector and an increase in public investment in infrastructure. For example, as part of the implementation of national projects, the demand for building metals such as rebar and sheet metal is growing.
Diversification of export markets. Sanctions and restrictions on traditional export destinations (for example, to Europe) have led to a reorientation to the markets of Asia and Africa. In 2023, metal exports to East Asian countries increased by 30%. The main recipients are China, India and Vietnam. Companies such as NLMK and Severstal are actively developing new logistics routes and partnerships.
Investments in the modernization of production facilities. Russian metallurgical companies continue to invest in upgrading equipment to increase efficiency and reduce environmental stress. For example, in 2023, MMK announced an investment of 40 billion rubles in projects to improve the environment and reduce carbon emissions. This corresponds to the global trends of sustainable development and allows companies to strengthen their positions in the international arena.
Increased competition and consolidation. Against the background of changes in the market environment, there is an active consolidation among metallurgical companies. In 2023, several acquisitions took place, which contributed to reducing excess capacity and improving efficiency. An example is the unification of a number of small companies in the regions, which allows them to jointly optimize logistics and sales.
Digitalization and automation of processes. Metallurgical companies are actively implementing digital technologies to optimize production processes and supply chain management. In 2023, Severstal launched a platform for real-time monitoring and analysis of production data, which reduced costs by 15% and increased productivity.
Reducing the influence of traditional suppliers of raw materials. Russian metallurgical companies are beginning to reduce their dependence on foreign suppliers of raw materials. In 2023, the share of domestic iron ore production increased to 85%, which reduced vulnerability to external factors.
Geopolitical challenges. The year 2023 was a year of serious geopolitical changes that had a significant impact on the Russian metals market. The sanctions imposed against Russia have limited access to some foreign markets and technological resources. As a result, manufacturers began actively searching for new markets, as well as implementing their own developments to reduce dependence on imports.
