STEEL TUBES

Vitaly GNATUSH, expert with DerzhZovnishInform

UKRAINE

Ukrainian production of steel tubes is still in fever. Apparently, the course of this ‘disease’ is determined not only by management of tube works, but also by the general situation in the country’s economy and by the degree of desire of the involved parties to settle the accumulated problems.

According to the data with Metallurgprom assn, the top Ukrainian manufacturers produced only 81,000 metric tons (mt) of steel tubes in February 2000 (see table 1). This figure comes to only about 80% of the average monthly output in 1999. Altogether, the January-February 2000 output corresponds to 85% of the respective 1999 performance figures. At the same time, tube output gained approximately 10% compared to January 2000.

In January-February 2000 actually only two manufacturers, namely Nizhnedneprovsk Tube Rolling Works and Ilyich Iron and Steel Works of Mariupol, topped the average monthly output figures of 1999. The other manufacturers, including Khartsyzsk Tube Works considerably reduced production.

At the same time, quite a peculiar situation has emerged in exports of Ukrainian tubes. The fresh data with the State Customs Service of Ukraine indicate that Ukraine exported about 108,900 mt of steel tubes worth USD 38.9 million, some 3% up against the respective period of 1999. However, in comparison with November-December 1999 there is a clear evidence of a 25% decrease in exports (see the figure).

During the period under review, the overall exports gained volume in comparison with the respective period of the previous year due to an increase in supplies of seamless tubes (+20%) and other welded tubes (+22%). Meanwhile, exports of large-diameter welded tubes plunged as low as some 1.9 times.

The pattern of steel tube exports has undergone considerable changes in the current year. Though the share of seamless tubes increased up to 69.6% of the total tube exports against 61.9% in 1999, the portion of welded tubes dropped. In particular, the share of large-diameter welded tubes reduced from 16.9% in 1999 down to 13.9%, and the share of other welded tubes – from 21.1% in 1999 to 16.5%.

The reasons for such changes are rather prosaic: firstly, it is the smaller number of orders for large-diameter welded tubes; secondly, it is the increase in prices for sheets and HR coils. The latter has stimulated an almost 15% increase in prices for Ukrainian-made other welded tubes. The price situation on the Russian market for this kind of tubes is developing a little more slackly. Taking into account transportation expenses, this definitely adds some problems to sales of Ukrainian welded tubes.

During the period of January-February 2000 steel tubes from Ukraine were shipped to 33 countries, whereas in 1999 the list of Ukrainian clients comprised companies from 62 countries. The overwhelming majority of tubes (82.7%) was purchased by CIS member-states. Eastern European countries consumed 4.6% of the total Ukrainian tube exports, North and Central American states had 3.5%, Asian countries 2.8%, the Baltic States 2.5%, and EU countries 1.8% (see table 2). These data show rather weighty changes in the geography of supplies compared with 1999. The portion of CIS member-states increased 10.5%, while the share of Asian countries and EU states simultaneously reduced by 8.1% and 7.6% respectively.

Russia is an indisputable leader among the countries importing Ukrainian steel tubes. In January-February 2000 Russia imported 70,300 mt of Ukrainian steel tubes or 64.5% of the total tube exports from Ukraine. Seamless tubes accounted for 67.7% of the total exports to this country, other welded tubes for 15.2%, and large-diameter welded tubes for 17.2%.

Table 1. Output of steel tubes in Ukraine

Source: Metallurgprom assn

Seamless tubes

In January-February 2000 Russia led the way in consumption of Ukrainian seamless tubes. It imported approximately 47,500 mt or 62.7% of the total export of these tubes. Besides to Russia, seamless tubes were also imported by Turkmenistan (7,100 mt), Mexico (3,400 mt), Bulgaria (3,300 mt), Egypt (2,100 mt), Iran (1,800 mt), and other countries. In total, 27 countries of the world obtained seamless tubes from Ukraine. The top three regions importing Ukrainian seamless tubes were the CIS (81.6% of the total Ukrainian exports of seamless tubes), Eastern Europe (5.9%), and North and Central America (4.9%). During the 2 months of 2000, only 500 mt of seamless tubes were delivered to EU states, which corresponds to only 0.8% of export supplies to this region in the respective 1999′ period. It is an evidence that the mechanism of Ukrainian seamless tube supplies to the EU does not comply with the quotas imposed on this commodity.

As it is known, on February 17, 2000 the EU Commission issued a document imposing a 38.5% antidumping duty against imports of Ukrainian seamless tubes. The duty-free annual quota for 30,000 mt has been apportioned in the following way: 19,500 mt for Nizhnedneprovsk Tube Rolling Works, 7,500 mt for Dnepropetrovsk Tube Works, and 3,000 mt for Nikopol Yuzhnotrubny Works. Seamless tubes within the duty-free quota will be exported at prices calculated using a special price matrix, while shipments of duty-free tubes will bear special certificates of production origin.

Export of steel tubes from Ukraine in 1999-2000

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

Large-diameter welded tubes

The situation on the market for this product continues to be rather unfavourable for Ukraine. Out of the total exports, the largest portion of Ukrainian-made large-diameter welded tubes was purchased by CIS member-states (98.0%), including Russia with 79.6%.

Other welded tubes

Throughout the period under review approximately 77.6% of these tubes were dispatched to CIS member-states, including 59.2% to Russia. Among other regions consuming Ukrainian welded tubes, EU countries purchased 8.4% of the total exports of other welded tubes from Ukraine and the Baltic States acquired 8.9%. On the whole, 20 countries, save for African and South American counties, have imported other welded tubes from Ukraine in the current year.

In January-February 2000 Ukraine imported about 3,600 mt of steel tubes worth roughly USD 3.2 million. Hot-rolled seamless tubes made up 89.8% of the total physical imports (89.5% of the total value) and other welded tubes — 10.1% and 10.5% respectively. Large-diameter welded tubes have not been imported this year so far. Main imports of seamless tubes were made from Austria (2,300 mt) and Russia (800 mt), while other welded tubes primarily came from Russia (approximately 300 mt). The import geography is quite extensive and embraces 17 countries that supply seamless tubes and 12 countries that export other welded tubes to Ukraine.

Summarizing the data on production, exports, and imports of steel tubes in January-February 2000 and comparing them with the 1999 performance results (see table 3), one can draw a conclusion that the situation on the Ukrainian steel tube market has aggravated some more.

Taking into account the average monthly figures, analysis of the available information demonstrates an almost 20% lag of production and export of steel tubes this year against 1999. In the meantime, imports of steel tubes have increased as high as 1.5 times in 2000. All this reveals a critical situation in Ukrainian tubemaking this year.

RUSSIAN FEDERATION

Metal Expert magazine (quoting the State Statistics Committee of the Russian Federation) informs that, unlike in Ukraine, steel tube production at Russian enterprises increased 1.8 times in the 2 months of 2000 against the respective period of 1999. Performance of tube making tightly correlates with overall situation in the Russian economy. According to JSC ChermetInformatsiya, in January-February 2000 Russia boosted industrial output by 13% compared with the 2 months of 1999. Compared with the previous month, manufacturing output in Russia grew 3.6% in February 2000. It is also notable that during the 2 months of 2000 industrial manufacturers marked their prices 7.9% up.

Russian manufacturers make efforts to execute a project of local production of import-substituting commodities. In particular, JSC Volzhsk Tube Works has started producing welded tubes for Transneft using steel coils made at Magnitogorsk Iron and Steel Works. The first shipment amounted to approximately 5,000 mt. In order to finish this order, Magnitogorsk ISW has commenced production of plate strips from high-alloy steel. It should be noted that, besides Magnitogorsk ISW, JSC Volzhsk Tube Works fruitfully cooperates with Severstal Iron and Steel Works. The latter supplies strips made of Cr70 steel for production of high-strength welded tubes, 1,420 millimeters in diameter. Moreover, according to the information with Interfax news agency, experts of Volzhsk Tube Works have worked over a number of investment projects, including a project involving reconstruction of an electric tube welding mill “2520” to manufacture tubes, 1,420 mm in diameter, for JSC Gazprom. In 2000 the works plans to manufacture 457,000 mt of steel tubes, 17.7% more than in the previous year.

In 2000 Chelyabinsk Tube Rolling Works is going to channel investments to finish construction of a section for three-layer corrosion-resistant tube coating, which is scheduled to be phased in some time in July 2000.

According to information of JSC ChermetInformatsiya and Metal of Ukraine magazine, three Russian tube works (namely JSC TAGMET, Chelyabinsk Tube Rolling Works, and Pervouralsk Tube Works) have spent 2 years trying to convince the European Commission that the decision on a 26.8% antidumping duty against imports of seamless tubes had a discriminatory nature. After all, in January 2000 the Eurocommission granted these three enterprises EU-bound duty-free exports of 24,000 mt of products per year. The duty-free quota for JSC TAGMET equals 12,500 mt, for Chelyabinsk Tube Rolling Works 5,500 mt, and for Pervouralsk Tube Works 6,000 mt.

USA

In July-December 1999 and at the beginning of 2000 (in January) the US market for oil country tubular goods featured a favorable trend. During this period prices for tubing and casing tubes gained an average of 11.8% (see table 4).

The most substantial increase (+15.5%) in average monthly prices was observed in respect to seamless tubing, whereas prices for seamless casing tubes made of carbon steel were the most reluctant to increase (+7.6%).

Table 3. Ukrainian market for steel tubes (‘000 metric tons)

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

Source: OJSC CherMetInformatsiya Bulletin

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