Companies in the metallurgical sector have found themselves in a difficult situation and are experiencing difficulties repaying loans, said Anatoly Popov, Deputy Chairman of the Management Board of Sberbank.

According to him, the metallurgists' problems are linked to two main factors. "These are a fairly strong ruble and a fairly high key rate, and the spread between real inflation and the key rate," Reuters quotes Popov as saying.

Several major Sberbank borrowers have requested loan restructuring, and their payment schedules have been adjusted, Deputy Chairman of the Bank's Management Board Alexander Vedyakhin announced yesterday. "Overall, everything is under control," he assured. As a reminder, metallurgical companies are among the top three recipients of Sberbank loans.

According to the Central Bank, the metallurgical industry's problems are estimated at up to 600 billion rubles. This is the increase in non-performing debt for companies in the sector as of the third quarter. Metallurgical companies were hit by falling demand and prices for their products, the Central Bank wrote.

The crisis in the metallurgy industry, which lost Western markets and a third of its exports compared to pre-war levels due to sanctions, is comparable to what it was in the 1990s, Severstal CEO Alexander Shevelev complained in September. Last year, according to Rosstat, metallurgists reduced output by 1.5%, despite demand from defense plants churning out tanks and bombs for the front in three shifts. In 2025, the decline accelerated to a collapse: in the third quarter, it was 6.9% year-on-year, and in July, it exceeded 10%.

Key companies in the industry reported a sharp decline in output. Magnitogorsk Iron and Steel Works, one of the largest in Europe and the second-largest in Russia by volume, reported an 18% drop in steel production and a 9% decline in pig iron for the second quarter. Mechel reported an 11% decline in steel sales for the first half of the year. TMK, the country's largest steel pipe producer, lost 18% of its steel pipe sales and nearly 22% of its seamless pipe sales. Severstal suffered a threefold drop in profits and . a negative cash flow of 21.2 billion rubles for the January-September period

Due to falling demand, expensive loans, and deteriorating financial performance, almost all Russian metallurgical plants have begun cutting staff, told Reuters . industry sources

According to one source, metallurgists are primarily cutting support staff. Another source said the industry would prefer to switch to a four-day workweek, as major automakers have already done, but is still hesitant. The metallurgical industry currently has too many workers, but companies are trying to avoid mass layoffs, the source told Reuters.

Source: Moscow Times https://archive.is/CWWi3