The article examines the macroeconomic conditions of the metallurgical industry of Russia. The industry produces up to 70 billion U.S. dollars worth of products, more than a third of which are exported to the avant-garde countries. The metallurgy of Russia has a leading position in the world trade of steel products, being the absolute leader in sales volumes of the aluminum, nickel, ferrous metals, etc. However, the industry has accumulated substantial amounts of outdated technological equipment. The industry needs modernization. It is necessary to increase the innovative capital. In this regard, the analysis of capital accumulation in the industry and of technological progress is very relevant. The article describes the characteristics of the dynamics of the formation of productive capital in the industry: capital intensity; productivity of capital; capital-labor ratio. The period under review is from 1995 to 2015. It is shown that from 1998 to 2004, when the industry had first undergone technological upgrading after privatization, the return on capital increased by 6 times and then stabilized. The capital-labor ratio in the last ten years varied cyclically with a slight growth, reflecting the stagnation in the industry. It is the increase in the capital-labor ratio, in accordance with the Arrow model of learning in the production process, that leads to the acceleration of technical progress in industry exhibiting a virtual lack of technological progress after the crisis of 2008-2009. For the forecast calculation of the dynamics of production in the metallurgical industry in the medium term up to 2020, we have used the Cobb-Douglas production function with technical progress increasing production, and estimated its parameters. The derived aggregate production function has allowed to carry out a medium-term forecast for the development of the industry up to 2020. We have established that further accumulation of fixed productive capital in the industry without technological breakthrough will not lead to a substantial increase of value added in the industry. We have concluded that for further qualitative development of the industry, it is necessary, firstly, to start a new technological breakthrough, and, secondly, to move to the production of a wider range of downstream products.