Russia's Largest Steelmakers Report A Plunge In Profits
- 30.07.2026, 21:13
The industry has been hit by an unprecedented crisis.
Economic stagnation, Western sanctions, and high interest rates on loans have plunged Russia’s metallurgy sector—one of the country’s key industries, accounting for 15% of total domestic output—into its worst crisis in several decades, reports The Moscow Times.
Russia’s largest steel producer—the Novolipetsk Steel Plant—saw its revenue fall by 12% (388 billion rubles) and its net profit drop by more than half in the first half of the year: it amounted to 21 billion rubles, compared to 45.6 billion rubles a year earlier, according to its IFRS financial statements.
“Severstal,” which owns the Cherepovets Metallurgical Plant, three mining and processing plants, and pipe mills, reported a ninefold drop in profit—to 4.12 billion rubles. The company’s revenue fell by 14%, and its EBITDA was halved.
The Magnitogorsk Iron and Steel Works became unprofitable: according to its IFRS financial statements, it lost 19.1 billion rubles in the first half of the year, with revenue down 10%.
The Russian steel industry is facing an “unprecedented crisis,” according to analysts at SberInvest: “There has never been a situation like this before—both in terms of duration and the depth of the decline.” Domestic demand for steel is falling due to the economic slowdown, while exports—which previously bailed out steelmakers—are suffering from sanctions, a strong ruble, and expensive logistics, writes Sberbank CIB.
As a result, the industry’s largest companies are facing cash flow shortfalls: Severstal reported a negative cash flow of 70.2 billion rubles for the first half of the year, while NLMK reported 11 billion rubles. This is how much inflows into their accounts fell short of outflows. In 2026, steelmakers’ profits “may hit new lows for the past decade,” note Sberbank analysts.
“Two key factors are putting pressure on the metals market. First, a decline in domestic demand in metal-intensive industries—construction, machine building, the oil and gas sector, shipbuilding, and the production of agricultural machinery and railroad cars. Second, the closure of most export markets,” complained Alexey Parshukov, senior vice president of the Industrial and Metallurgical Holding (PMH), in an interview with RBC.
Unable to sell their metal, steelmakers cut steel production last year to a 15-year low. In January–May of this year, production fell by another 8.4%, to 26.6 million metric tons, according to Chermet Corporation.
“The decline in domestic demand for steel—which is shrinking even faster than production—is driven by several key factors: the Bank of Russia’s high key rate, reduced access to market-based financing in the construction and machine-building sectors, and the postponement of many infrastructure projects,” notes Ivan Efanov, an analyst at “Cifra Broker.”
A peaceful resolution of the conflict in Ukraine could help steelmakers, according to Finam analyst Alexey Kalachev: “The need to rebuild territories and infrastructure would then create significant additional demand for steel products. However, this potential driver is being pushed further and further into the future.”