Moscow: MMK, one of Russia’s biggest steelmakers, plans to cut 10% of its management personnel and pause new investment as it is operating at 60% capacity due to weak domestic demand, the company said on Monday.
Demand for metals from Russia’s construction, energy, automotive and machinery manufacturing sectors, the major customers, is shrinking as companies pause investment due to high interest rates as the central bank fights inflation. The metals industry was also hit by Western sanctions.
“The metals industry is the most sensitive ‘barometer’ of the economic situation, and today the state of the industry is quite challenging,” MMK‘s CEO Pavel Shilyaev said in a statement.
“We are forced to make a decision to reduce the number of staff considering the current capacity utilization of production facilities,” said Shilyaev. He added that the company has stopped investment apart from efficiency and environmental projects.
MMK, based in the Urals region, is the biggest supplier of steel to Russia’s domestic market and is ranked among the four biggest producers in Russia. The company, which employs over 56,000 people, declined to say how many jobs will be cut.
Russia’s economic growth slowed to 1% last year, compared to 4.3% in 2021, and is expected to remain at the same level this year. Some sectors, including the metals and coal industries, experienced difficulties and asked the government for support. Shilyaev said he does not expect demand for steel to rebound until 2027.