Russia economy in meltdown as its top companies are forced to slash exports

 

Russia’s leading exporters have reduced their rail cargo volumes amid an economic slowdown caused by the ongoing war. A document from Russian Railways obtained by Reuters shows that major exporters—including aluminium producer Rusal and oil company Gazpromneft—have lowered their planned commodity shipments by rail for 2025.

As a result, Russian Railways has cut its planned spending by an additional 32.5 billion rubles (£302 million), reducing its total investment for 2025 to 858.4 billion rubles—about 3.5% less than previously forecast. This follows an earlier decision to cut spending by 40% in 2025 compared to 2024, citing higher interest expenses.

Cargo volumes, which hit a 15-year low in 2024, serve as a key indicator of the state of Russia’s export-dependent manufacturing sector. Russian Railways now expects to carry 36.7 million metric tons less cargo in 2025 than the originally projected 1.24 billion tons. This decline is linked to reduced shipments from several major firms, including aluminium giant Rusal and steelmakers Severstal and MMK.

The document also highlights the impact of the Bank of Russia’s tight monetary policy—maintaining a 21% key interest rate since October—which has slowed construction activity. Higher borrowing costs have similarly led steel manufacturers to cut back on shipments.

Additionally, aluminium producer Rusal plans to reduce annual output by 250,000 tons due to rising alumina prices. The report points to intensified sanctions on metal, forestry, and oil companies such as Gazpromneft as further negative factors.

Russia’s iron and steel industry, representing nearly 5% of GDP, has faced a sharp decline in export revenues after losing access to key markets due to Western sanctions, according to Moscow consultancy Yakov and Partners. The World Steel Association reports that steel production, exports, and domestic demand all fell in 2024—a trend that has continued into 2025, as noted by Chermet Corporation.

Exports of wood, fertilizers, and metals to China have also decreased, contributing to a 7.5% drop in total trade turnover between the two countries this year. The document further mentions disruptions caused by “third-party interference,” likely referring to Ukrainian drone strikes targeting oil refineries, which have also affected shipment flows.