Major Russian exporters including Rusal and Gazpromneft have cut the planned volume of commodities like metal and oil products they send by rail, a Russian Railways document seen by Reuters showed, the latest sign of subdued demand as the country’s war economy slows.

The state-owned rail monopoly intends to reduce 2025 spending by an additional 32.5 billion roubles ($408 million), or around 3.5%, to 858.4 billion roubles, due to the revised cargo forecast, according to the document dated March 20. It had already planned to spend 40% less on investment this year than in 2024 in the face of soaring interest payment costs.

Russian Railways declined to comment.

Its cargo volumes, which hit a 15-year low in 2024, are a useful gauge of the manufacturing health of Russia’s export-driven economy.

The document Reuters reviewed anticipates Russian Railways will transport 36.7 million metric tons less than the 1.24 billion tons initially projected for 2025. It named a dozen major companies contributing to reduced rail shipment volumes, including aluminium giant Rusal and steelmakers Severstal and MMK.

Although total cargo volumes this year are still expected to be slightly higher than the 1.18 billion tons in 2024, they have fallen 6.8% year-on-year in the January to April period, according to data on its website.

In the document, a presentation to Russian Railways’ board from First Deputy CEO Vadim Mikhaylov, the company said its investment plan can be adjusted in exceptional circumstances and listed five main reasons to reduce spending, blaming factors outside its control.

Tight monetary policy, with the Bank of Russia’s key interest rate at 21% since October, has slowed the pace of construction, the document said.

High rates have also led steel producers to reduce loading volumes, it said, naming Severstal, MMK, TMK, NLMK and Evraz, among companies contributing to reduced cargo volumes.

TMK declined to comment. Evraz, MMK, NLMK and Severstal did not immediately respond to requests for comment.

Russia’s iron and steel industry, which contributes nearly 5% to the country’s GDP, has seen export revenues plunge since losing access to high-margin markets because of Western sanctions, according to a report by Moscow-based consultancy Yakov and Partners.

Steel production, exports and local demand dropped in 2024, according to the World Steel Association. Production has continued to drop this year, according to analytical firm Chermet Corporation.

SLOWING ECONOMY

Russian Railways highlighted in the document reduced demand in other sectors, such as from aluminium giant Rusal.

Rusal said it was sticking to plans announced in November, without giving further details. Those plans include cutting annual aluminium output by 250,000 tons due to rising alumina prices.

The document named increased sanctions on metal, forestry and oil companies - Gazpromneft, Surgutneftegaz and Tatneft - as a negative factor.

Those three companies did not respond to requests for comment.

Reduced exports of wood, fertiliser, metals and oil products to China have also hurt cargo volumes, the document showed. Trade turnover between Russia and China is down 7.5% since the start of the year.

The document also blamed “the interference of third parties mainly in relation to oil refineries”, a tacit reference to Ukrainian drone strikes on Russian energy facilities.