The Russian government has noted a severe collapse of industry. Production of cars has already fallen by 97%, steel by 50%, railcars and diesel locomotives by 40-60%, glass by 60%, washing machines and refrigerators by 58%, - said the head of the Ministry of Industry and Trade Denis Manturov.

"The decline in exports and the closure of Western markets will lead to a decrease in volumes in the most capacious industries, including metallurgy, the chemical complex and the timber industry," - said Manturov.

Official statistics already record a death stupor into which entire sectors of Putinomics, deprived of access to imported supplies, are falling.

In May, for example, the production of cars fell by 97%, fiber optic cables by 81%, and buses by 77%.

Suppliers of Russian Railways (RZD) have been left without foreign bearings and are massively reducing production: diesel locomotives - by 63%, freight cars - by 52%, passenger cars - by 40%.

Metallurgy, the second largest industry after oil and gas extraction, has become unprofitable: all the largest companies are operating with negative profitability, sources at Severstal said.

Steel and alloy production has fallen by 20-50%, said Andrey Leonov, vice president of the Russian Steel association, which unites Russia's largest metallurgical companies.

Due to sanctions that closed export markets, the Magnitogorsk Metallurgical Plant has stopped two blast furnaces out of eight and reduced pig iron production by 30%. Severstal has lost 20-25% of its load.

In these conditions, according to Manturov, it is necessary to “abandon market-based industrial policy” and displace imported goods and equipment: “The Russian government will abandon market-based industrial policy and will set out on the path of ensuring technological sovereignty.”

At the same time, there will be no return to the planned economy of the USSR, he assured, despite the elements of “manual management.”

At the same time, the Russian government is preparing a plan to support the metallurgical industry, which faced a decline in production in the second half of last year, Deputy Head of the Ministry of Industry and Trade Mikhail Yurin said on Tuesday.

According to him, a package of measures has already been discussed with the Minister of Industry and representatives of the industry and will be launched in the near future.

Deputy Director of the Metallurgy Department of the Ministry of Industry and Trade Andrey Savelyev said that the possibility of reducing the tax burden for metallurgists is being considered:

“The good times have passed,” Savelyev lamented.

At those metallurgical companies that are operating at a profit, profitability has decreased by “10 percent,” at electrometallurgical plants and some vertically integrated companies it is “close to zero,” or there is a negative financial flow in general, the official calculated.

According to Savelyev, the Ministry of Industry and Trade is considering the idea of ​​changing the formula for calculating the excise tax on liquid steel so that metallurgists pay less to the budget. Last year, they transferred 64 billion rubles, and the Ministry of Finance has set aside 69 billion rubles in revenue for the Treasury-2025 project.

According to estimates by the World Steel Association, steel production in Russia last year decreased by 7%, to 70.7 million tons, and this was the worst result among all the largest producers. In China, for example, steel production fell by 1.7%, while in India it grew by 6.3%.

Magnitogorsk Metallurgical Plant (MMK), Russia’s largest steelworks, saw its steel output fall 14% year-on-year to 11.95 million tonnes, its worst performance in five years. Pig iron output fell 4.5% to 9.49 million tonnes, and the company’s sales fell by almost 10%.

Cut off from Western markets by sanctions, steelmakers have been unable to find new customers in Asia. According to Metals & Mining Intelligence (MMI), Russian steel sales abroad fell 22% to 14.1 million tonnes in January-September. Exports of steel pipes fell fourfold, from 436,000 tonnes to 100,000.

Domestic steel demand fell 3 million tonnes to 41 million, mainly due to problems with developers who are being forced to scale back projects due to the Central Bank’s high interest rate.

Demand for steel for the automotive industry has also not lived up to expectations, as Chinese manufacturers do not want to “stamp” parts in Russia, unlike German manufacturers who built factories.

In fact, Russia simply has no interest in developing the automotive industry. The state assembles various designs from Chinese imports, while it does not need to develop anything. The automotive industry for the Kremlin authorities is a real charity and an opportunity for the leader to come to production and talk about the revival of the domestic industry.

The Russians are also not doing well with aircraft construction. For example, Aeroflot is once again postponing the dates for receiving the MS-21 and Superjet aircraft to 2027. The decision is due to the inability of the United Aircraft Corporation (UAC) and Rostec to fully import critical components, such as avionics, engines, and chassis. The main reason is the difficulties in importing key components.

According to Russian media, the airline is not ready to operate aircraft with unconfirmed flight characteristics. In addition, certification of aircraft can take up to a year and a half. To complete the tests, several ready-made copies are needed, which are not available at the moment. International certification of new models also remains in doubt, which complicates the use of aircraft on international routes.

Aeroflot CEO Sergey Aleksandrovsky has repeatedly stated at internal meetings that in the near future the company cannot rely on the domestic aviation industry. The main priority now is to find spare parts and engines for the foreign fleet.

Aeroflot management is skeptical about the prospects for operating domestic aircraft, say two sources. Among the key problems are the lack of spare parts and the complexity of maintenance.

How can we not recall Vladimir Putin's statement about 2 thousand airliners that the Russian aviation industry, which has become stronger than ever, will assemble by 2030. The subordinates of the Kremlin leader were even embarrassed by such stunning prospects, and within a few weeks they gently corrected their boss to a thousand aircraft. After that, the planned indicators began to change again - and, of course, in a downward direction. Now it would be nice if the Russian aviation industry assembled at least a few aircraft...

The situation is no different in other industries. For example, the other day Putin demanded from his subordinates to urgently save the coal industry and take emergency measures to support Russian coal companies, which are suffering multi-billion dollar losses and, according to the estimates of the Russian State Analytical Center of the Fuel and Energy Industry of the Ministry of Energy, are on the verge of mass bankruptcies. Putin instructed to develop an aid package for coal miners “as soon as possible.”

Having lost Western markets and faced with a sharp drop in demand in “friendly” countries, Russian coal companies ended the first 9 months of 2024 with a net loss of 91 billion rubles, a record among all sectors of the economy. According to Rosstat, half of the enterprises in the industry, which includes more than 30 mono-city enterprises and hundreds of thousands of employed Russians, became unprofitable. Against the background of financial problems, companies began to reduce coal production: according to the results of September, the decline was 4.9% for hard coal and 4.7% for brown coal.

Total coal exports from Russia in January–July fell by 11.4%, to 112.6 million tons. And supplies to China, which became the main client of coal miners after the sanctions, fell by 8% in the first half of the year, and no growth is expected. The fact is that Beijing introduced duties on Russian coal, officials explained. At the same time, other suppliers - Indonesia and Australia - did not fall under them, since they are part of the free trade zone with China.

In general, the Russian economy is now facing the threat of a large-scale jump in corporate bankruptcies. This is stated in the report of the Central Committee of the Russian Economy, an analytical center close to the Russian government, headed by the brother of the former assistant to the president for economics, and now the Minister of Defense, Andrei Belousov.

As the center's experts note, a sharp increase in lending rates following the key rate of the Central Bank, which at the end of last year reached a record level in more than 20 years - 21% per annum. At the moment, every fifth manufacturing enterprise is forced to pay two-thirds of its pre-tax profit on debt service. And this is a “risky level,” the Central Committee of the Russian Federation for Economic and Social Development of the Russian Federation notes.

The amount of profit from which a business could pay interest on loans is also decreasing - by 17%, or 5 trillion rubles, according to Rosstat data for January-October 2024.

Under threat of bankruptcy are companies in the coal industry, which have accumulated 80 billion rubles in losses due to sanctions and the collapse of exports; 800 shopping centers across Russia, which, in the wake of more expensive loans, were hit by tax increases. They may be joined by 30% of all truckers (according to AvtoGruzEx estimates), road builders, who have lost almost half of their revenue, as well as about 30 airlines and IT businesses.

A de facto “credit crunch” has already begun in the economy, notes the Central Bank of Ukraine: in November-December last year, the issuance of new loans to key sectors of the economy fell by 30-50%. At the same time, it is also becoming increasingly difficult to borrow money on the business debt market: bond rates are rising.

“In the near future, this threatens to increase the number of defaults and cross-defaults on credit obligations,” the Central Bank of Ukraine reports.

It is significant that in this state of affairs, Russian dictator Vladimir Putin told Russians that the decline in world oil prices, which US President Donald Trump called a lever of pressure on Russia, would harm the American economy. But Putin modestly remained silent about the Russian economy.

Olena Marchenko, specially for "Ukrainian Energy"