Russian steel producer Severstal has adjusted its budget for 2026 in response to a significant deterioration in the steel market, as announced by CEO Alexander Shevelev.
Severstal stated that the current market situation is becoming increasingly difficult, prompting the company to implement additional cost optimization measures.
Commenting on the situation, CEO Alexander Shevelev said: The situation in the industry is becoming more and more difficult. Optimizing the team's costs The efforts we have been making in recent years have given us a significant safety cushion. This allows us to continue the work of our divisions, strive to maintain production facilities and responsibly fulfill our social and environmental obligations. However, the reality is that it is impossible to completely avoid optimization measures.
Cost reduction measures implemented
The company indicated that the cost 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 reduced by 24 percent.
- Administrative expenses have been significantly reduced, including a five percent reduction in labor costs.
According to the manufacturer, the reduction in labor costs will mainly occur as a result of the hiring moratorium, the replacement of contractors with their own staff, and broader organizational changes.
Strategic projects saved
Despite the cuts, Severstal stressed that it would continue to implement key strategic projects aimed at ensuring long-term competitiveness and supporting regional development. These include the construction of a plant for the production of iron ore pellets.
Severstal announced its investment plan for 2026 in February of this year, as previously reported by SteelOrbis.
