Costs have decreased.

Scrap Black Metal Prices Plummet to Three-Year Lows

Scrap black metal prices are in a downward spiral, hitting a three-year low of 15,500 rubles per ton. Industry insiders view this level as critical, predicting a potential closure of 30% of scrap collection businesses. Market fluctuations stem from decreasing domestic demand, ongoing export restrictions, and a host of other economic and geopolitical factors.

The decline in prices became apparent after most metallurgical enterprises reduced their black metal scrap purchase prices by 1,000 rubles, starting from May 12. This move forecasted the metal's minimum price since early 2025.

Scrap metal predominantly serves as a crucial ingredient in steel production via electric arc furnaces. Approximately one-third of the nation's steel production relies on electric steel. However, steel production in Russia experienced a 4.4% drop in May to 6 million tons. Subsequently, a 5.2% decrease was recorded in the first five months of 2025, amounting to 29.1 million tons.

Industry experts believe that these adverse circumstances put the profitability of the scrap collection business at risk. The market may experience another 20-30% loss, primarily affecting small and medium-sized scrap collectors who cannot compete and bear reduced margins. The industry is expected to consolidate, as larger players take over, warned Dmitry Orekhov, managing director of NCR.

The escalating threats to the scrap collection industry are most pronounced in regions geared towards export. In the North-West and the Far East, about 70% of capacities have already closed, with Siberia and central Russia following suit. The yearly quota for exporting black metal scrap from Russia beyond the EAEU stands at 1.5 million tons. Exports within the quota are subject to a 5% duty, with a minimum cost of €15 per ton, while exports above the quota attract a 5% tax and a minimum of €290 per ton.

Despite earlier optimistic forecasts, steel consumption in Russia may plunge to 12.5 million tons by year-end, nearly a third less than 2024 levels. Metalurgical and scrap collection companies surveyed by Kommersant did not respond to requests for comments.

Behind the Crisis: Causes and Influencing Factors

The current price slump and potential closure of scrap collection enterprises in Russia can be linked to the following key factors:

Limited Export Opportunities: Stringent export quotas and tariffs have halved Russia's black metal scrap export volume from 4.3 million tons in 2021 to 2.2 million tons in 2024. Main markets for these exports are countries outside the EAEU, such as India, Turkey, and Southeast Asian countries. Exchange rate imbalances and global scrap price stagnation make an increase in Russian supplies unlikely, according to industry analyst Nickel Halin from "EYler".
Sanctions and Trade Barriers: International sanctions by countries like Canada, the United States, and the European Union impact various sectors, including the supply chains essential for scrap metal processing and recycling-further straining scrap enterprises. Restricted trade, technology transfers, and shipping capacities limit Russia's ability to export or import necessary processing equipment, compounding the difficulties faced by scrap operations.
Market Instability due to Geopolitical Conflict: The ongoing conflict between Russia and Ukraine, along with sanctions and political instability, limits Russia's access to international markets. This circumstance reduces the demand for Russian scrap metals, creating additional pressure on prices within the country.
Domestic Challenges: Economic difficulties, technical inefficiencies, and operational hurdles affecting other industries might also impact the scrap collection sector. Various industrial plants shut down for economic and technical reasons, suggesting that scrap enterprises may face similar operational challenges.

These aspects form a daunting mix, presenting challenges for the scrap metal industry by disrupting supply chains, impeding market demand, and endangering scrap collection enterprises in Russia.

The decrease in scrap black metal prices could be linked to the limitation of export opportunities due to stringent quotas and tariffs, as this has reduced Russia's black metal scrap export volume by half, impacting the industry's profitability.
The financial viability of the scrap collection industry may be at risk due to the combined effects of economic sanctions, restricted trade, and political instability, which limit Russia's access to international markets and reduce demand for domestic scrap metals.