STEEL TUBES

Vitaly GNATUSH, expert with DerzhZovnishInform

UKRAINE

Production

From January till May 2000 Ukraine’s output of and trade in steel tubes & pipes gradually recovered and reached the 1999 figures.

According to Metallurgprom Association, in the month of May 2000, main steel tube manufacturers made some 123,000 tonnes of this commodity (see table 1). Over the five months of 2000, total output amounted to 116% of production in the respective period in 1999. In comparison with April 2000, tube and pipe output added some 2%.

The 5-month results show that only three enterprises outran the 1999 monthly performance figures with a share of confidence, namely, Nizhnedneprovsk Tube Rolling Works, Novomoskovsk Tube Works, and Ilyich Iron and Steel Works of Mariupol. Simultaneously, the rest of companies, except for Khartsyzsk Tube Works, were picking up the production rates and now are drawing close to the last year’s figures. The problems of Khartsyzsk Tube Works mainly rest on the specificity of the market for large-diameter tubes. Better quality products made by Western rivals add to the works’ hardships. To make Khartsyzsk tubes competitive on the market, in May this enterprise manufactured a pilot batch of tubes, 1,420 mm in diameter and 18.7 mm in wall thickness, made of Cr-70 (X-70) steel. Azovstal Iron and Steel Works of Mariupol (Metallurgiyny kombinat "Azovstal") supplied the skelp of this steel grade. Cr-70 steel is rather popular on the Western market, but has never been produced in the CIS. Perhaps, the Khartsyzsk management endeavors to stay on the Russian market that features sufficient demand. In Russia, the Ukrainian company will challenge Austrian, German, and Japanese producers of large-diameter tubes.

Exports

As regards the exports, the Custom Service of Ukraine reports that during the five months of the present year export of steel tubes amounted to 353,000 tonnes worth a total of $137.3 million. Compared to the respective period of 1999, the export figure gained some 33%. Meanwhile, being compared to the data for the 4th quarter of 1999, this year’s export features a 10% reduction (see figure 1). The favorable trend is in place.

Table 1. Output of steel tubes in Ukraine

Source: Metallurgprom assn

The 5 months of 2000 saw export growth against the respective period of 1999. This was mainly brought about by the accretion in seamless tube exports (+52%) and in exports of other welded tubes (+14%). Coincidentally, export of large-diameter welded tubes dropped by some 7.4%.

Export pattern for steel tubes has been subject to major alterations this year. The share of seamless tubes has reached 69.8% against 61.9% in 1999, whereas the portion of welded tube export has suffered a decrease. Specifically, the share of large-diameter welded tubes dropped from 16.9% in 1999 to 13.4% now, and that of the other welded tubes lowered from 21.1% in 1999 to 16.8%.

In the period of January-May 2000, the number of countries consuming Ukrainian steel tubes and pipes gradually increased climbing to 44. Nevertheless, this still comes short of the 1999 figure of 62 countries.

The great majority of tubes (some 77.6%) was acquired by CIS member-states. The share of the EU made up 6.7% of the total tube export, Asian countries had 5.5%, Eastern Europe 4.5%, the Baltic States 1.9%, and North and Central America came the last with a 1.8% share (see table 2).

Hence, compared to 1999, the tube export destinations have changed fundamentally. These changes are mainly characterized by an increase in the share of the CIS and East European states by 5.4% and 1.2% respectively. Simultaneously, the share of the Asian countries halved, and that of the EU states reduced 1.4 times. One of the reasons for this export redistribution is introduction of an import duty on EU imports of Ukrainian seamless tubes.

Table 2. Ukrainian exports of steel tubes in 1999-2000 (‘000 tonnes)

Among the countries importing steel tubes and pipes from Ukraine, Russia gets the better part with some 225,800 tonnes accounting for 63.9% of Ukraine’s total export in the period considered. Out of this figure, seamless tubes made up 71.8%, other welded tubes had 11.6%, and large-diameter welded tubes accounted for 16.6%.

The Russian mass media continue to discuss whether a 70% import duty should be imposed on Ukrainian tubes and pipes to protect Russia’s domestic market. It is pointed out there is much talk about support of the local Russian manufacturers, yet there is no true action. The Russians mention the Federal law “On measures to protect economic interests of the Russian Federation” and the governmental “Regulation on execution of inquiry prior to adoption of antidumping measures” that need to be effected.

Seamless tubes

Within the period from January till May 2000, Russia remained the largest consumer of Ukrainian seamless tubes with roughly 162,200 tonnes imported or 65.8% of relevant Ukraine’s total export amount. Beside the Russian Federation, other importers were Turkmenistan with 10,200 tonnes of seamless tubes, Belarus with 6,900 tonnes, Egypt with 6,800 t, Bulgaria with 6,700 t, Turkey with 5,200 t, Italy with 4,300 t, Mexico with 4,200 t, Iran with 4,100 t, Israel with 3,500 t, and other countries. The total of 39 countries purchased seamless tubes from Ukraine. In regional terms, the top three importers were the CIS states with 77.7% of Ukraine’s seamless tube export, Asian countries with 7.2%, and East European countries and the EU member-states with 4.4% each. Over the five months of 2000, the EU received 10,800 tonnes of Ukrainian-made seamless tubes, i.e. 35.2% compared to exports in the respective period in 1999. Therefore, after the memorable Decision of the EU Commission, the Ukrainian presence on the European seamless tube market went downhill considerably.

Large-diameter welded tubes

The current situation on the market for this commodity remains rather hard for Ukraine. Nevertheless, by the end of the period under review, exports got even with the 1999 figure. The number of importing countries increased from 10 to 11. Of the total amount of large-diameter welded tubes exported beyond Ukraine, the largest share of 91.1% went to the CIS, notably, 78.9% to Russia.

Other welded tubes

Over the 5 months of 2000, the CIS states acquired some 66.4% of these Ukrainian tubes, including about 44.4% purchased by Russia. The other large regions consuming Ukrainian-made welded tubes included the EU member-states and East European countries with 16.7% and 7.8% respectively. On the whole, 26 countries, save for African and South American ones, have been purchasing other welded tubes made in Ukraine this year.

Imports

In January-May 2000, Ukraine imported some 9,200 tonnes of steel tubes and pipes spending $10.2 million. Along with this, the share of hot-rolled seamless tubes equaled to 84.7% of the total physical imports, other welded tubes accounted for 13.8%, whereas large-diameter welded tubes had only 1.5%. Bulk supplies of seamless tubes came from Austria (namely, 4,100 tonnes), Russia (3,100 tonnes), and Japan (400 tonnes); whereas other welded tubes were delivered from Russia (1,000 tonnes), and Poland (90 tonnes). Within the 5 months of the current year, the scope of import origins gradually expanded, which resulted in 24 countries exporting seamless tubes and 20 countries supplying other welded tubes to Ukraine.

Summarizing the data on manufacturing output, exports, and imports of steel tubes and pipes in January-May 2000 and comparing these to the 1999 figures (see table 3), one can make a conclusion on a rather peculiar situation on the Ukrainian market for steel tubes and pipes.

Information analysis, together with the average monthly performance figures, shows that the manufacturing lag has been broken this year against 1999 and the five-month period even saw a 8.5% increase in tube outputs. Nevertheless, there is no guarantee that the mills will manage to retain these production growth rates. According to our data, utilization of Ukrainian tube-making capacities grew from 17% in 1999 to some 18.4% in the present year. Simultaneously, tube exports added 4.3%, whereas the recovered domestic demand grew by 20%. Finally, imports of steel tubes and pipes increased 1.5 times compared to the 1999 figure.

Table 3. The Ukrainian market for steel tubes (‘000 tonnes)

THE Russian Federation

Russia got even with Ukraine in steel tube output of the main tube mills. According to the Russian Statistics Agency, in the four months of 2000 tube outputs increased 1.92 times compared to the same period of 1999. Along with this, seamless and electric-welded tube production amounted to 188.4 % and 200.8% respectively against the four months of 1999. It should be mentioned that all the 11 main Russian tube manufacturers outran the January-February 1999 rates 1.2 to 3 times. Considering the data available, utilization of engineered tube-making capacities makes some 36% in Russia. The main factor to call forth better performance of Russian tube makers is the greater demand of Russian oil-and-gas companies that consume the bulk of tubular goods.

Simultaneously, Russian producers make efforts to execute an import-substitution program. Specifically, in the nearest future a new joint-stock company will be set up to produce large-diameter tubes. This new undertaking will be founded by joint-stock company Izhora Works (Izhorskiye zavody), Germany’s Europipe GmbH, and JSC Severstal. In the coming 1-1.5 years it is planned to make use of the new company and mill 5000 to launch the 800,000-tpy plate-making capacities and output of longitudinally-welded large-diameter (to 1,420 mm) tubes to satisfy Gazprom’s demand.

Tremendous efforts are made to extend service life of natural gas pipelines via application of various coating. JSC Chelyabinsk Tube Works (Chelyabinsky trubny zavod) put into operation the first 150,000-tpy stage of an automatic production line applying three-layer polymeric coating on tubes and pipes, 530 to 1,220 mm in diameter. The payback period on this new line is expected to make no more than a year. The second stage for 300,000 tonnes per year should be phased in by the end of the present year. The second stage will be able to coat 1,420-mm tubes and pipes.

THE USA

The American market for oil country tubular goods featured positive trends both in September through December 1999 and in January-May 2000. Over the latter period, prices for oil well tubing and casing gained an average of 7.3% and 9.6% respectively (see table 4).

The most significant 12% increase was reported on average monthly prices for seamless casing, grade 80. Meanwhile, the prices for electric-resistance welded tubing, grade 80, and seamless tubes, grade 80, experienced the least price increase amounting to some 6.0-6.2%.

Table 4. Average monthly prices for oil country tubular goods on the US domestic market (Houston area) in 1999-2000 ($/tonne)

Source: ChermetInformatsiya Bulletin

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