Vladimir Putin has suffered a new hammer blow after one of Russia’s top steelmakers posted its lowest profit margin in 16 years as a slowing domestic economy dented demand.

Severstal, which is owned by sanctioned billionaire Alexey Mordashov and employs around 50,000 people, said in a statement that earnings before interest, taxes, depreciation, and amortisation in 2025 plummeted by 42% to 137.6 billion rubles ($1.8billion) compared to a year earlier. Revenue also slumped 14%. The EBITDA margin, a measure of profitability, sank to just 19% – the lowest level for the leading steelmaker since 2009 – when the global steel industry was being hammered by the financial crisis.

Severstal Chief Executive Officer Alexander Shevelev said in the statement: “Steel demand in Russia fell sharply as the economy cooled under the weight of high interest rates.”

He added that a 14% year-on-year decline in demand weighed on steel product prices.

Shevelev also pointed to a downturn in China’s property market, which sparked record steel exports from the country and added to pressure on prices across much of Russia.

Russia relies heavily on its steelmakers, which have historically been among the most profitable globally, with margins rarely dropping below 30% over recent years.

Severstal has been hit by international restrictions since the start of the Ukraine war, cutting exports in favour of focusing more on its domestic market.

But Russia’s economy has come under severe pressure over recent months and cooled significantly for the first time last year since the Kremlin sent troops to Ukraine in February 2022.

Panic has swept the country, with authorities desperately seeking ways to curb soaring inflation and near-record interest rates.