Russian Steel Profits Collapse as Sanctions and Demand Slump Bite Hard
So here’s what’s happening in Russia’s steel industry—and it’s not looking good.
One of the biggest names in Russian steel, Magnitogorsk Iron and Steel Works, or MMK, has reported a staggering drop in profits—almost nine times lower than the same period last year. To put it in numbers, their profits have plunged to just 5.6 billion rubles, or around $70 million. And that’s not all—their revenues have fallen by 25%, and in the second quarter alone, they actually ended up with negative cash flow. More money was going out than coming in.
What’s behind this dramatic downturn? A mix of rising interest rates, shrinking domestic demand, and international sanctions that are making it harder for these companies to export. These challenges are hitting the entire industry, not just MMK.
Also Read:- Montreal's Air Ranked Among the Worst in the World Due to Prairie Wildfires
- Billy Elekana Outpoints Ibo Aslan in Tactical UFC Abu Dhabi Clash
Take Severstal, another giant in Russian steel production. It’s run by Alexei Mordashov, one of the richest men in Russia. Severstal has also seen its profits cut in half and is reporting even larger cash flow problems than MMK—with 29 billion rubles more flowing out than coming in over the first half of the year. And for the third quarter in a row, Severstal has chosen not to pay any dividends—a clear signal of how cautious they’re being.
The domestic market isn’t offering much relief either. Steel demand within Russia has dropped sharply—by about 15% this year, on top of a 6% drop last year. With construction slowing down nearly 30% and GDP growth crawling at a third of last year’s pace, there simply isn’t enough internal consumption to make up for the losses abroad.
Executives like Severstal’s CEO are sounding the alarm. At a recent economic forum in St. Petersburg, he warned that as much as 6 million tons of steel might go unsold this year due to collapsing demand—that’s roughly 10% of last year’s output. And things could still get worse, with projections suggesting domestic demand may drop to as low as 39 million tons.
Government officials have acknowledged the crisis. Russia’s Industry and Trade Minister has floated the idea of tax relief for steelmakers and criticized the ruble’s exchange rate, which is making Russian steel too expensive to export competitively. There’s talk of easing regulatory costs, but analysts don’t expect a quick recovery.
Banks like Promsvyazbank say the outlook for the rest of 2025 remains bleak. High borrowing costs and a slowing economy are making it nearly impossible for steelmakers to invest in upgrades or expand their operations.
So in short, Russia’s steel industry—a historic pillar of the economy—is now being squeezed from every angle. And without major intervention or a turnaround in demand, it looks like this pressure won’t be easing anytime soon.
Read More:
0 Comments