At the Magnitogorsk Iron and Steel Works reported problems due to sanctions

Against the backdrop of anti-Russian sanctions, the Magnitogorsk Iron and Steel Works faced a drop in profitability,decline in production and lack of profit

At the Magnitogorsk Iron and Steel Works, in connection with the sanctions imposed against RUSSIA, the profitability of production has significantly decreased, said the chairman of the board of directors of the plant, Viktor Rashnikov.

“Earlier, our profitability was 20 and 25%, but in May the profitability was 4%, in June - from 1 to 1.6%, and this will be good. We have never worked like this,” he complained at a meeting of the Union of Industrialists and Entrepreneurs of the Chelyabinsk Region (quote from Oktagon.Media).

The volume of production, according to Rashnikov, decreased by 40% - if in 2021 MMK sold 1 million tons of products, now it is 600 thousand tons. The enterprise has “no profit”, and the investment program is stopped.

Rashnikov noted that with the investment program that MMK has, profitability should be at least 15%, but in the domestic market the price of steel fell by 17%. “It’s just some kind of mockery,” he concluded.

The Ministry of Industry said that metallurgists should not finance the Russian Railways Business program

According to the HEAD of the board of directors of MMK, one of the solutions to the problem may be the abolition of excise taxes on steel. He pointed out that the excise tax is tied to exports, and the company has not shipped products for EXPORT for three months. But the excise continues to take.

Excises on steel and new formulas for calculating the MET for coking coal and iron ore have been introduced in Russia since January 2022 to withdraw excess profits from metallurgists. Deputy Minister of Industry and Trade Viktor Yevtukhov noted that the first five months of 2022 were not bad for metallurgists, but now both consumption and production volumes have begun to fall. “We agreed to monitor June and see what will happen to the indicators, what the trend will be. If the reduction turns out to be significant, we will insist that the excise tax should be abolished. This is an important issue,” he stressed.

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Yevtukhov acknowledged that the steel industry in Russia is in a difficult situation due to Western sanctions, which makes it difficult for companies to pay the tariffs of Russian Railways, which were increased by the government in June by 11% to finance the company's investment program. He wondered why this should be done at the expense of metallurgists. “Are there no other sources of Russian Railways support for the implementation of the investment program? No money? There is money,” he concluded.

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In March, the European Union introduced a ban on the import of a wide range of steel products from Russia. Shortly thereafter, metallurgists announced that they would have to reorient about 4 million tons of steel products per year to the east.