Russian steelmaker Severstal has indicated that the country’s steel consumption is heavily influenced by the automotive sector. The company expects a decline in steel demand by 5% to 7% in 2024 due to high borrowing costs impacting customer investment plans.

Severstal’s CEO, Alexander Shevelev, highlighted that the construction and mechanical engineering sectors, which are major consumers of steel, are also experiencing reduced activity and investment. This trend is exacerbated by the recent increase in the Bank of Russia’s key interest rate to 21%, the highest since the early 2000s.

Severstal, which has shifted its focus to the domestic market following Western sanctions, now generates 80% of its sales within Russia. The company reported a 9% drop in steel demand in the third quarter of this year.