RussiaBottom Line
Investors should reduce positions in Russian companies focused on steel and coal and increase allocation to producers of solid minerals and mining equipment suppliers with proven localization. The drop in steel output to a 15-year low and the rise in the coal industry's accounts payable above RUB 1.5 trillion point to a structural crisis in traditional segments, while growth in exploration for solid minerals (+30%) and increased procurement from local producers in Krasnoyarsk Krai (+66.9%) are creating new entry points.
Key Developments
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Russia's steel output fell to 67 million tons in 2025 — a 15-year low — The production decline is driven by sanctions, economic slowdown, and high interest rates, with steel exports dropping by 10 million tons (roughly a third) from 2021 to 2024. Portfolio implication: Avoid shares of metals companies without strong diversification into solid minerals; possible short-term pressure on EBITDA due to lower volumes and prices.
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Coal industry debt exceeds RUB 1.5 trillion, government plans no support — The sector's accounts payable grew by 26% compared to 2024, while authorities have no intention of taking stimulus measures in the near term. Portfolio implication: Consider the coal sector a high-risk zone for defaults; debt restructuring may lead to write-offs or forced consolidation.
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Ministry of Economic Development cuts 2026 GDP forecast to 0.4% (from 1.3%) — Macroeconomic slowdown reduces domestic demand for ore, coal, and metals. Portfolio implication: Expect further contraction in industrial production; shift focus to companies with export revenue in foreign currency and a low share of the domestic market.
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Diversification in exploration: investments in hydrocarbons down 10%, in solid minerals up 30% — At the 9th Congress of Geologists, a pivot to solid minerals was announced, and the declarative principle for subsoil use was also abolished. Portfolio implication: Increase portfolio weight in companies holding licenses for solid minerals (critical metals, tin), especially in the context of strategic sovereignty.
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Non-ferrous and sulfur ore mining output rises 1.8 times by May 2025 — In May 2026, output reached 57.7 thousand tons, reflecting a revival in the non-ferrous metals segment. Portfolio implication: A signal to buy shares of copper, nickel, and sulfur producers; further supported by growing cooperation in Krasnoyarsk Krai (procurement from local suppliers up 66.9%).
Sector Pulse
| Indicator | Assessment | Trend |
|---|---|---|
| News Flow | High | Stable |
| Sentiment | Bearish | Deteriorating |
| Policy Environment | Restrictive | Tightening |
| Key Theme | Structural decline in steel and coal amid transition to solid minerals and localization | — |
Risk Watch
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Debt crisis risk in the coal industry — Accounts payable >RUB 1.5 trillion with no government support could trigger a wave of bankruptcies and a 15–20% reduction in output. Probability: High. Impact: High.
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Domestic demand contraction due to low GDP growth — The 2026 GDP forecast has been cut to 0.4%, further undermining consumption of steel, cement, and energy. Probability: High. Impact: Medium.
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Technological stagnation amid lagging localization — Despite increased procurement in Krasnoyarsk Krai, nationwide investment in the mining industry fell by 2.3%, which could slow import substitution. Probability: Medium. Impact: Medium.
Outlook
Key events and indicators for the coming week:
- EXPO EURASIA VIETNAM 2026 exhibition (June 24–28) — indicator of export opportunities for Russian mining technologies.
- Global steel and coal price dynamics — factor of external demand.
- Updated data on the coal industry's accounts payable for Q1 2026 (if published).
Positioning: Adopt a capital preservation strategy in the solid minerals segment and companies involved in equipment localization, avoiding long positions in coal and steel securities until macroeconomic and debt dynamics become clearer.