Dmitry Petrovsky17:26, 23.03.26

One of the largest Russian steel producers has begun to shut down some of its capacity, reduce investments, and reduce management staff.

Russia’s metallurgy industry is becoming a new sore spot for the Kremlin . Leading producers have begun to reduce capacity due to falling domestic demand and limited export opportunities, writes Bloomberg .

One of the largest Russian steel producers, Magnitogorsk Metallurgical Plant (MMK), has begun to shut down some of its capacity, reduce investments, and reduce management staff by 10%.

“Steel production is the most sensitive barometer of the economic situation, and the current state of the industry is very difficult,” said the company’s CEO, Pavlo Shylyaev.

It is another sign of Russia’s deepening economic downturn. High interest rates, which the central bank raised after the economy overheated in 2024, are weighing on key industries. Metallurgical enterprises are particularly vulnerable due to a global steel glut and sanctions that restrict exports.

The industry is not key to GDP, but it provides employment for hundreds of thousands of people, often in cities where the entire economy is based on a single enterprise.

MMK is currently operating at about 60% capacity and remains unprofitable. The company has already closed one coal mine, shut down some equipment, and put the rest on short-time work.

According to estimates by PJSC Severstal, steel consumption in Russia in 2025 has fallen to its lowest level since 2020. Last year, the company also recorded its lowest profitability in 16 years.

For now, the Russian government has refused to provide broad tax breaks to steel producers, saying that support will only be considered on a case-by-case basis.

Analysts warn that without additional state support, the Russian metallurgy industry risks returning to the performance of the early 2000s.

(c)UNIAN 2026