“Russian steelmakers’ production capacity exceeds market demand by twofold. A recovery in demand for metal products is not expected in 2026,” he said.
He added that, in order to “maintain market positions,” MMK is implementing a range of cost-cutting measures, including optimizing inventories, reducing equipment repairs and nearly halting its investment program.
“A difficult but economically justified decision has been made to take idle production units out of operation. This measure has affected nearly all enterprises within the group,” Shilyaev said.
The Chertinskaya-Koksovaya mine of MMK-Ugol has already been placed under conservation, part of the equipment at MMK-Metiz has been taken out of operation, and working hours have been reduced at the Lysva Metallurgical Plant. MMK has also decided to cut management staff at all levels by 10%.
According to the company’s CEO, the Russian metal products market is facing growing pressure from negative factors linked to geopolitical developments, sanctions and a general slowdown in the global economy. The downturn has affected all industrial sectors, particularly metal-intensive industries such as construction, machinery and oil and gas.
“Metallurgy is the most sensitive barometer of the economic situation, and today the industry’s position is very difficult. MMK has been fully affected as well,” Shilyaev said.
In early March, MMK’s main shareholder Viktor Rashnikov said the company is operating at minimal profitability, which prevents the industry from fully developing and investing.
“We were operating at about 70% capacity. But that is not the main issue — the main issue is that we have completely lost profitability. Costs have risen, as expected, including monopoly tariffs, while steel prices have fallen. Previously, exports provided an outlet, but now exports have largely stopped and everyone has shifted to the domestic market. As a result, profitability has fallen to around 2–3%. For the steel industry to develop and invest, profitability needs to be 20% or higher,” he said.
Earlier, even Kremlin-affiliated Russian analysts said the country’s economy is approaching stagflation, while the industrial sector continues to show a steady deterioration in performance.