The Russian Steel Industry, 1990-2009

Abstract

A noted specialist on Russia's industries surveys the restructuring of Russia's steel industry in response to the challenging conditions of the 1990s (collapsing domestic markets, the nonpayments crisis, and insider privatization) and its subsequent stabilization during the early years of the 21st century due to effective implementation of a "survival model" at many plants. The author examines the major elements of that model, namely an export orientation made possible by relatively low labor and energy costs, reliable access to basic raw materials, a focus on crude (rather than specialty) steel, not inconsequential investment in process modernization, and effective control exercised by new private ownership. The paper's concluding section explores the new challenges faced by the industry due to the global financial crisis of late 2008-2009, and particularly the decline in world steel and company share prices, the extreme tightening of credit, the difficulties of servicing existing levels of debt, and provisions of a government assistance program that appear to preclude major capacity closures as a means of reducing costs. Journal of Economic Literature, Classification Numbers: D290, L610, O140, P230. 3 figures, 1 table, 97 references.