Russia’s largest steelmaker, MMK, has seen its profits crash in the first half of 2025, as the economy continues to struggle under the strains of war and sanctions. The Magnitogorsk Iron and Steel Works describes itself as one of the world’s largest steel producers with a production volume of almost 12 million tonnes.

Latest data show that the company earned nine times less during the first six months of this year compared to the same timeframe in 2024. In the first half of the year, revenues fell by 25% to 313.5 billion roubles (£2.49bn) due to a drop in sales and selling prices. This has had a catastrophic effect on company profits, which plummeted by 88.8% year-on-year to 5.6 billion roubles (£52.5m).

MMK’s management warned that it did not expect business to pick up any time soon, as demand for its products dries up.

“Demand for metal products is expected to remain under pressure in the third quarter of 2025 amid the adverse impact of the high key (interest) rate on business activity,” the company said.

Russian businesses and consumers have been hit by a double whammy of spiralling inflation and high interest rates. With inflation stubbornly hovering around 9%, Russia‘s Central Bank had been forced to hike the key interest to a two decade high of 21%.

In June, bank officials were able to lower the rate by 1 percentage point to 20% – the first cut in three years. However, the rate cut is unlikely to provide much relief for businesses and consumers alike.

Last year, Russian metallurgists faced a drop in demand from key domestic consumers and a decrease in plant utilisation due to the increase in the key interest rate.

Steel consumption in Russia fell by 6% in 2024, and this year the industry lobby expects a further 10% reduction in demand.

It comes as Ukraine‘s Foreign Intelligence Service predicts that commercial airlines in Russia could face a total collapse by as early as 2027.

As a result of sanctions, maintenance costs have increased by 38%, and half of the Airbus fleet in Russia is no longer in use. Moreover, new airplanes that have not even come out of testing yet have already risen in price by 45-70% compared to original pricing plans.

It is estimated that Russia will lose 50 to 100 aircraft every year, and by 2027 the industry may face a complete aviation collapse.