Russia’s steel industry reports massive losses
In the past week, two of Russia’s largest steel producers have posted earnings showing losses of up to –89%, as Magnitogorsk Iron and Steel Works (MMK) and Severstal reported collapsing profits, falling revenues, and negative cash flow for the second quarter and first half of 2025. The reports confirm that Russia’s once-dominant steel industry is now grappling with structural decline under the weight of sanctions, rising costs, and a shrinking domestic economy.
MMK’s net profit for the first half of 2025 fell by 88.8% compared to the same period last year. Revenue dropped by 25% to 313.5 billion rubles. In the second quarter alone, MMK recorded a negative operating cash flow of 4.9 billion rubles, indicating that its core production activities were no longer profitable. Management attributed the downturn to reduced sales volumes, declining steel prices, a persistently high key interest rate, and a general slowdown in Russian business activity.
Severstal’s earnings, released a few days earlier, show similar distress. The company’s second-quarter net profit dropped by 55% year-on-year to 15.5 billion rubles. First-half revenue was down 16%, and Severstal reported a negative cash flow of 29.1 billion rubles. The company cited high financing costs, weak demand, and low export pricing as key reasons for the decline.
Both companies announced suspensions of dividend payments — Severstal for the third consecutive quarter — as they prioritize liquidity over returns. Once seen as reliable and profitable players in global steel markets, MMK and Severstal are now openly signaling financial strain.
The wider picture is just as grim.
Domestic consumption of steel is falling as construction slows and infrastructure projects are delayed or canceled. Export markets remain limited due to sanctions, while buyers in Asia and the Middle East are demanding lower prices and better terms. With little foreign investment and interest rates remaining above 20%, Russian producers are being squeezed from both ends.
MMK’s decision to livestream the launch of a new metallurgical installation just before posting some of the worst financials in its post-Soviet history drew ridicule in the Russian business press. One outlet described the broadcast as “a ceremonial distraction from a collapsing balance sheet.”
Neither company offered guidance suggesting an improvement in Q3. Analysts warn that without state intervention or a sharp reversal in economic conditions, Russia’s steelmakers could face continued contraction through the end of the year. Potential responses include asset sales, production cuts, or government-backed restructuring.
Russia’s steel industry was once a foundation of its industrial and export power. The latest earnings reports suggest that foundation is cracking — and fast.
