Russian steel producer Severstal has adjusted its 2026 budget in response to a significant deterioration in steel market conditions, as announced by CEO Alexander Shevelev.
Severstal stated that the current market environment has become increasingly challenging, prompting the company to implement additional cost optimization measures.
Commenting on the situation, CEO Alexander Shevelev said, “The situation in the industry is becoming increasingly complex. The team's cost optimization efforts, which we've been conducting in recent years, have given us a significant cushion. This allows us to continue operating our units, strive to maintain production capacity, and responsibly fulfill our social and environmental obligations. However, the reality is that it's impossible to completely avoid optimization measures.”
Cost reduction measures implemented
The company indicated that expenditure items for 2026 have been reduced compared to previously approved plans, without affecting the safety and stability of production.
- The repair fund has been reduced by 14 percent.
- Capital expenditures have been lowered by 24 percent.
- Administrative expenses have been significantly cut, including a five percent reduction in payroll costs.
According to the producer, the reduction in payroll costs will mainly result from a hiring freeze, the replacement of contractors with in-house personnel, and broader organizational adjustments.
Strategic projects maintained
Despite the cuts, Severstal emphasized that it will continue implementing key strategic projects aimed at ensuring long-term competitiveness and supporting regional development. These include the construction of an iron ore pellet production facility.
Severstal had announced its investment plan for 2026 in February this year, as previously reported by SteelOrbis.