Russia considers excise on steel imports amid support for under-pressure industries

The Russian government announced Jan. 22 that it had identified 12 industries where output is expected to shrink and that need priority support, including the iron and steel sector, and instructed executive agencies to prepare forecasts with an emphasis on analyzing the impact of competition from imports.

The announcement comes with Russian steel companies pressing the government to introduce an excise tax on imported steel to help level the field against imports.

Russia's Ministry of Industry and Trade earlier this week confirmed to local media that an excise tax on steel imports is being considered.

Analysts see a positive outcome as likely given the slowdown in the Russian economy and the near-exhausted potential for further domestic tax hikes.

A Moscow-based analyst, who wished to remain anonymous, said the likelihood of the excise tax being introduced is high given that currently only domestic steel producers bear this cost.

Russia imposed an excise tax on liquid steel, payable on every ton produced domestically, in January 2022, with Rb30,000/mt ($396/mt) being the cutoff price below which the duty for steel cast into slabs does not apply.

Platts' weekly FOB Black Sea slab assessment, currently at $435/mt FOB, has not been at a level that nullifies the tax since January 2023.

The supply of steel from abroad in semi-finished and rolled forms amounted to 2.3 million mt in January-November 2025, which annualizes to 2.5 million mt.

Of the total, 800,000 mt was supplied by China and 1.46 million mt by Kazakhstan, according to data from S&P Global Market Intelligence's Global Trade Analytics Suite.

A source close to Kazakhstan's largest steel producer Qarmet, which made 1.5 million mt of steel for the Russian market last year, said he did not expect the excise to be introduced, at least for Kazakhstan, because "it [the country or the mill] is in close contact with Russia's Ministry of Industry and Trade."

The source added however that if the excise tax were introduced, it could not be applied selectively and would apply to all suppliers.

Government aims for higher tax revenues

Discussions over introducing excise on imports go hand in hand with increases in various taxes for both domestic businesses and the general population to offset a decline in oil and gas revenues for the government, which continues to spend heavily on the war in Ukraine.

In 2025, Russia's military budget reached a record Rb13.5 trillion ($177.6 billion), with the 2026 target set at Rb12.6 trillion, according to the Federal Budget Law for 2025-2027.

At the same time, oil and gas revenues in Russia's federal budget decreased by 24% in 2025 to Rb8.5 trillion, according to the Ministry of Finance. With oil prices widely forecast to be lower this year amid a global supply overhang, revenues could be squeezed further this year.

To make up for some of the income losses, the Russian government has implemented various tax hikes, including income tax rises, and from Jan. 1, 2026, it increased VAT from 20% to 22%.

Several non-tax payments, but effectively hidden taxes, have gone up, too. Car scrapping fees, payable by domestic manufacturers and importers alike, have just increased by 10%-25%, and for over 300 ph cars now exceed Rb1 million/vehicle. A similar fee of up to Rb5,000/unit will be introduced from Sept. 1 for both domestically made and imported electronic goods.

Weaker purchasing power

Weaker purchasing power, for both local administrations and the population, is meanwhile having an impact on steel demand.

Russia's leading steel producer Severstal estimates steel consumption in Russia contracted by 14% in 2025 to 37.8 million mt, its lowest in almost a decade, and it expects it to drop further in 2026 with the Russian economy in stagnation this year.

The International Monetary Fund on Jan. 19 revised its forecast for Russia's GDP growth this year to 0.8%, only slightly better than 0.6% growth last year.