Russia’s industrial giants, including aluminum producer Rusal and oil firm Gazpromneft, are scaling back rail shipments of metals and refined products, according to an internal Russian Railways document seen by Reuters—the latest evidence of a deepening economic slump exacerbated by sanctions, high interest rates, and Ukrainian drone attacks.
Key Data Points
📉 Rail Cargo Cuts:
- 36.7M metric tons less than originally projected for 2025 (was 1.24B tons).
- 6.8% drop year-on-year (Jan-Apr 2025).
💸 Spending Slashed: Russian Railways trims 2025 budget by $408M (3.5%) after already cutting 40% of investments.
Why Exports Are Falling
🔒 Sanctions Bite:
- Steelmakers (Severstal, MMK, NLMK) lost high-margin EU markets.
- Aluminum (Rusal) and oil (Gazpromneft) face tighter trade restrictions.
💥 Drone War Disruptions: Ukrainian strikes on refineries reduce oil product shipments.
🇨🇳 China Trade Slump: 7.5% drop in Russia-China turnover hits wood, fertilizer, and metal exports.
Sector-Specific Pain
🏭 Steel Crisis:
- Production down again in 2025 (Chermet Corp).
- Export revenues plunged post-sanctions (Yakov & Partners).
🛢️ Oil & Gas Strain: - Gazpromneft, Surgutneftegaz, Tatneft flagged in document for reduced shipments.
- Refineries under constant drone threat.
Broader Economic Drag
🏗️ Construction Slowdown: 21% interest rates freeze projects.
📉 Railway’s Warning: “External factors” (sanctions, war) forcing cuts.
What’s Next?
- More Cargo Declines: If China trade weakens further.
- Budget Cuts Spread: Other state firms may follow railways.
- Production Cuts: Rusal’s 250K-ton aluminum reduction could widen.
Russia’s Export Engine Slows: Rusal, Steelmakers Cut Rail Shipments as Economy Stalls