Russian metallurgical enterprises will be able to defer the payment of excise duty on liquid steel and mineral extraction tax (MET) until December 1, 2025. This decision stems from a draft government decree proposed by the Ministry of Finance, with details published on the ministry`s Telegram channel. This article explores why the industry requires assistance, the efficacy of the proposed measure, and its potential implications, as analyzed by experts.
The Ministry of Finance has prepared a draft resolution to support the ferrous metallurgy sector, proposing to postpone the payment deadlines for excise duty on liquid steel and MET on iron ore until December 1, 2025. The aim of this measure is to free up companies` working capital and stabilize their financial condition, a necessity identified through an analysis of the industry`s financial health. According to the Ministry of Finance, this will enable metallurgical enterprises to overcome current economic challenges and improve financial performance. The document is expected to come into effect upon its official publication.
According to Chermet Corporation data, steel production in Russia decreased by 3.8% in September, reaching 5.2 million tons. Since the beginning of 2025, the total decline has been even more significant, falling by 5.2% to 51 million tons.
Previously, the `Russian Steel` association appealed to the Ministry of Finance and the Ministry of Industry and Trade for more substantial support. The association proposed extending the deferral for excise duty on liquid steel and MET until December 30, and also sought to postpone the payment of other taxes and insurance contributions to the first half of 2026, with the option of gradual repayment.
«Russian steelmakers, primarily focused on the domestic market, experienced a significant drop in demand after the Central Bank sharply raised its key rate last year and the government curtailed preferential mortgage programs. Construction, the main consumer of steel, is highly dependent on lending conditions, which led to a decline in demand and prices for metal products. Steel exports are also constrained by sanctions, low global prices, and a strong ruble exchange rate. These factors have negatively impacted steel production volumes and the financial performance of ferrous metallurgy enterprises.»
«The industry`s systemic importance for related sectors such as construction, mechanical engineering, and the fuel and energy complex cannot be overstated. Despite adapting to new logistics routes and sales markets, production continues to operate under high interest rates and increased transportation and energy costs, making liquidity strategically crucial.»
Expert opinions are divided on the effectiveness of the Ministry of Finance`s proposed support for the metallurgical industry. Yulia Kovalenko, an associate professor at Plekhanov Russian University of Economics, believes that if the proposed benefits are adopted, they will unequivocally stimulate the development of ferrous metallurgy enterprises, increase their profitability, and enable the expansion of production capacities.
However, other experts express skepticism. Zaitsev emphasizes that the deferral of payments is not a subsidy but merely a temporary adjustment to the fiscal calendar, allowing for the redistribution of cash flows without canceling tax obligations. While this reduces short-term pressure on working capital and supports the regularity of domestic supplies and export contracts, a single deferral may not be sufficient to offset significant industry shocks.
Some experts believe the industry will require further support measures. Kalachev points out that the Ministry of Finance`s proposed steps are not very substantial. Steelmakers had hoped for a reduction in the excise tax base for liquid steel, but the growing federal budget deficit prevents the Ministry of Finance from agreeing to this. A deferral of MET and steel excise duty for a few months is the maximum the ministry can offer, with the budget merely receiving revenues later. For companies, this temporarily frees up working capital, reducing the need for expensive loans. However, payments will still be due by December 1, and Central Bank rates and steel demand are unlikely to change significantly by then, suggesting that new support measures for metallurgists will likely be needed by the end of the year, the analyst warned.
Ivan Petrov from the Financial University believes that the industry`s main problem is complicated logistics and freight transportation tariff increases that outpace inflation. He emphasizes that for the development of ferrous metallurgy, growth in new industrial and civil construction, as well as increased state orders for enterprises, are essential.
For the budget, this measure is neutral, as the temporary cash deficit will be covered by December 2025 without direct financing. Zaitsev concludes that in the medium term, the benefit lies in preserving the tax base and employment, whereas without support, there could have been a curtailment of modernization programs and a reduction in steel and finished rolled product output.
