The article assesses the innovation potential of Saint Petersburg, analyzes the dynamics of financing innovation activity in the steel industry of the city and determines the current development trend of the industry under consideration. The estimation of the innovation potential of Saint Petersburg is based on two methods. The first uses a functional model with four statistical indicators. The other lies in the calculation of the integral index of innovation activity. The results of the calculations for both methods proved to be different, but, on the whole, confirmed the upward trend. The method of integral evaluation of an innovation activity in the region has shown that the key factors of the innovation potential of Saint Petersburg is the concentration of human and financial resources, as well as the efficient use of these resources. The analysis of the financial performance of an innovation activity of metallurgical enterprises is based on the consideration of such indicators as the company's expenses on technological innovation, the scope of innovative goods, works and services, as well as the degree of influence of the results of innovation to ensure compliance with modern technical regulations, rules and standards. The investments of metallurgical enterprises in technological innovation according to the source of funding are analyzed separately. The main reason for the fall-off in the volume of innovative products in 2013 is a market glut and a fall in prices. On average, one-third of the companies annually marks the high impact of innovation. A steady decline in the share of companies that did not pay attention to the impact of innovation results should be noted as a further positive trend. It is also necessary to mention a certain tendency based on the analysis of the importance of an active government support for innovation.