Transportation Problems Hurting Exports and russian Steelmakers’ Revenues

russian steelmakers are facing delays in railway shipments, rising costs, and the risk of production shutdowns. The “russian steel” association has complained to the ministry of transport of the rf about “russian railways”’ refusal to approve requests to deliver finished products to ports in the northwest, particularly those on the Baltic Sea.

The problems intensified after cargo was rerouted from southern ports due to risks to navigation in the Azov-Black Sea basin. From January through August 2026, shipments of steel products through those ports fell to 6 million tons. In July–August, the decline amounted to 54% – from 1.86 million to 860,000 tons.

Ports on the Baltic route lack sufficient capacity for additional cargo. Unloading of railway wagons is delayed, while the shortage of locomotives and crews complicates their return for reloading. The situation is exacerbated by the priority given to grain transportation, which is forcing steelmakers to seek alternative routes. In October, the murmansk commercial seaport resumed the transshipment of steel products on a trial basis for the first time since 1996.

Rerouting cargo increases transportation costs by 20–30%. Shipping steel slabs through northwestern ports costs by $30 per ton more than through southern ports. The global steel surplus makes it impossible to offset these costs by raising prices. Delays also complicate the formation of shiploads and the chartering of vessels.

Logistics problems are exacerbating the industry’s overall decline. From January through September, “russian railways” (rzd) transported 35.2 million tons of ferrous metals – by 8.5% less than during the same period in 2025.

In the second half of 2026, losses in steel billet exports via the southern route could reach 7–8 million tons. No more than half of this volume will be redirected to other markets. Prolonged disruptions threaten the loss of customers, who may switch to alternative suppliers.

A decline in production and falling export profitability will reduce the rf’s tax revenues and increase steelmakers’ need for government support. Even after transportation resumes, russian producers will have to win back customers, particularly by lowering prices.