The Russian steel sector is confronting a structural crisis and weakening demand as 2026 begins. Public Joint Stock Company Magnitogorsk Iron & Steel Works (MMK) is experiencing the full force of this challenging environment, evidenced by recent production figures and a loss of market share. The critical question for investors is whether anticipated state aid can provide relief or if persistently high interest rates will inflict lasting damage on the company’s operations.
Government Support Package Awaited
In response to the industry’s difficulties, the Russian government is considering a specific relief package. Proposed measures include a deferral of tax payments for liquid steel and the mineral extraction tax on iron ore, potentially extending until the end of 2026. Furthermore, strategic investment projects could receive a three-year exemption from the consumption tax following their completion.
A pivotal meeting on these support measures, initially scheduled for mid-February, has been postponed and is now expected in late February 2026. Market observers view the outcome of this meeting as a key determinant for mitigating the pronounced decline in domestic steel consumption.
Sharp Production Declines Highlight Challenges
Operational data reveals the depth of the current pressures. During the first half of 2025, MMK reported a steep 18.2% drop in crude steel output, which fell to 5.19 million tonnes. Pig iron production also decreased, declining by 8.8% year-on-year to 4.56 million tonnes. Analysts attribute this contraction primarily to sluggish domestic demand, driven by high key interest rates, and unfavorable market conditions in Turkey.
This production cooldown has directly impacted sales, which retreated by 14.9% in the reporting period. A significant shift in competitive positioning is also underway: after holding the leading position in flat steel products throughout 2023 and 2024, MMK was overtaken in 2025 by a rival that captured a 33% market share in this segment.
Strategic Investments and Import Substitution Focus
Despite the operational headwinds, MMK continues to advance its long-term strategic initiatives. The company has allocated approximately 10.2 billion rubles for environmental projects in 2025. A comprehensive modernization of its coke and blast furnace production facilities remains on track for completion by 2027.
A parallel strategic focus is on reducing import dependency. The company is targeting the fourth quarter of 2026 to finish constructing a new foundry and forge. This facility is designed to manufacture technical products for the Russian and CIS markets, with a specific aim of decreasing reliance on imported forged rolls.
The market awaits the publication of MMK’s full financial results for the 2025 fiscal year, expected during the first quarter of 2026. These figures will clarify the extent to which the high-interest-rate environment eroded profitability over the past year. In the immediate term, investor attention is fixed on the upcoming government meeting and its decisions regarding proposed tax reliefs for the steel industry.
Ad
Public Joint Stock Company Magnitogorsk Iron & Steel Works Stock: Buy or Sell?! New Public Joint Stock Company Magnitogorsk Iron & Steel Works Analysis from February 21 delivers the answer:
The latest Public Joint Stock Company Magnitogorsk Iron & Steel Works figures speak for themselves: Urgent action needed for Public Joint Stock Company Magnitogorsk Iron & Steel Works investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from February 21.
Public Joint Stock Company Magnitogorsk Iron & Steel Works: Buy or sell? Read more here...
