The 2000 scenario for the steel tube market is likely to be the same as in the fourth quarter of 1999.

STEEL TUBES

Vitaliy GNATUSH, expert with DerzhZovnishInform

The 2000 scenario for the steel tube market is likely to be the same as in the fourth quarter of 1999.

UKRAINE

The Ukrainian tube sector entered the year 2000 with a massive heap of unresolved problems such as:

• shortage of current assets, which forces producers to get into tolling;

• shortage of hollow sections and strips, most of which are exported beyond Ukraine;

• antidumping inquiry of the European Commission;

• frozen business activity on the domestic market;

• unstable situation on fuel and power market.

Liberal home policy and protection of Ukrainian producers’ interests on the world market are the prerequisites for successful solution of these problems. Well-balanced trade within the CIS is also among the primary tasks. On the other hand, expansion of innovative activity could spur production modernization and help manufacturing of new worthwhile products.

Besides, it is highly important to revive the internal market of Ukraine. Special attention should be given to the construction industry, mechanical engineering and pipeline transportation.

Let’s concentrate in detail on steel tube production in Ukraine.

According to Metallurgprom association, the eight major Ukrainian steel tube manufacturers produced 1,157 ths. metric tons of tubes in 1999. This corresponds to only 79.8% of the previous year’s figure.

The average monthly tube output amounted to 96.4 ths. metric tons coming to 79.5% of the 1998 figure and to 64.4% of the 1997 figure (see table1 below).

Sources: State Statistics Committee of Ukraine, Metallurgprom association

Among the primary manufacturers, only Khartsyzsk Tube Works was able to surpass the 1998 output level. The other plants did not reach the respective 1998 figures. Three producers that were the closest to the 1998 performance were Dnepropetrovsk Tube Works (87.4%), Nizhnedneprovsk Tube Rolling Works (83.3%) and Nikopol Yuzhnotrubny Works (76.0%), whereas the greatest setback in output was registered at Lugansk Tube Works (33.5% of the 1998 level).

Proceeding from the performance results of these plants in 1999 and development forecasts for the global economy, steel tube output in 2000 is expected to increase by 4-6% coming to approximately 1,202-1,227 ths. metric tons.

The decline in steel tube production, along with the slackened domestic market, led to an unusual situation with Ukrainian exports.

According to the adjusted data with the State Customs Service of Ukraine, steel tube exports in 1999 amounted to approximately 813.1 ths. metric tons worth USD 309.4 mln. In 1999, seamless tubes made up 61.9% of tube export as compared to 57.9% in 1998, large-diameter welded tubes – 16.9% as compared to 18.1% in 1998 and other welded tubes – 21.2% as compared to 24.0% in 1998. Seamless tubes brought in 61.1% of the total export revenues, large-diameter welded tubes – 25.0% and other welded tubes – 13.9%.

Ukrainian steel tube exports in 1999 nearly reached the last year’s figure coming to 100.1%. Average monthly exports equaled 67.7 metric tons (see the figure below). During 1999, the tube export pattern was uneven. In January-May 1999, monthly tube exports were low (43.5-63.1 ths. metric tons), while the period of June-December saw tube exports increase to 54.1-92.4 ths. metric tons.

Ukrainian tubes were exported to 62 countries. CIS member-states consumed 72.2% of the total Ukrainian tube exports, Asian countries – 10.9%, EU – 9.4%, Eastern European countries – 3.3% and the Baltic States – 2.2% (see table 2).

During the period under review, Russia was the unrivaled leader among importers of Ukrainian tubes: it consumed 445.7 ths. metric tons or 54.8% of the total Ukrainian tube exports. The export breakdown was as follows: seamless tubes – 57.7%, other welded tubes – 24.3% and large-diameter welded tubes – 18.0%.

Besides to Russia, large shipments of Ukrainian tubes were bound to Uzbekistan (57.9 ths. metric tons), Turkey (47.3 ths. metric tons), Italy (35.4 ths. metric tons), Belarus (30.6 ths. metric tons), Turkmenistan (29.4 ths. metric tons) and Germany (27.7 ths. metric tons).

Seamless tubes

In 1999, Russia remained the primary consumer of Ukrainian-made seamless tubes (importing approximately 257.3 ths. metric tons or 51.0% of the total seamless tube exports from Ukraine). Other large importers of seamless tubes were Turkey (44.0 ths. metric tons), Italy (33.5 ths. metric tons), Germany (27.2 ths. metric tons) and Israel (18.1 ths. metric tons). The regional export distribution shows that the leaders are the CIS (62.5% of the total Ukrainian seamless tube exports), Asian countries (16.2%) and the EU (12.5%).

Large-diameter welded tubes

The situation on this market remains unfavorable for Ukraine. Export in 1999 totaled only 137.0 ths. metric tons, which equals to 91.0% of the 1998 figure. Russia consumed 58.5% and Uzbekistan – 23.0% of the total Ukrainian exports of large-diameter welded tubes. The lowest exports to Russia were registered in January (0.2 ths. metric tons), whereas September 1999 saw the highest export figure (20.7 ths. metric tons).

Other welded tubes

In 1999, total exports of this type of tubes came to 172.1 ths. metric tons. CIS countries imported 83.5% of these (including 62.9% bound to Russia). Exports to CIS countries nearly reached the 1998 level (99.4%). Among other regions importing Ukrainian welded tubes, the EU consumed 6.7% and the Baltic States – 4.5% of the total Ukrainian exports. Out of EU countries, the greatest shipments of welded tubes were exported to Greece (3.9 ths. metric tons) and Ireland (2.6 ths. metric tons). Tubes of this type were not exported to Africa and South America.

In 1999, Ukraine imported approximately 14.1 ths. metric tons of tubes for the total of some USD 15.4 mln. HR seamless tubes made up 75.5% of this quantity (and 84.7% in terms of export revenues), other welded tubes – 19.0% and 12.6% respectively and large-diameter welded tubes – 5.5% and 2.7% respectively.

Geography of steel tube suppliers is quite extensive. Seamless tubes were imported from 26 countries worldwide, other welded tubes – from 27 countries and large-diameter welded tubes – from 6 countries.

Seamless tubes were primarily imported from Russia (56.3% of the total imports), Austria (12.4%) and Japan (11.4%). Large-diameter welded tubes were imported mainly from Russia (54.8%) and Germany (7.6%), while other welded tubes – from Russia (79.0%), Belarus (4.1%) and Poland (3.4%).

Steel tube output, exports and imports in 1999 and in 1997-98 (see table 3) indicate definite instability of the Ukrainian steel tube market.

Considering the mentioned figures, we believe that the situation on the steel tube market in 2000 will not alter significantly and will remain at the level of the 4-th quarter of 1999. There are good reasons to expect certain stabilization of global prices for oil and petroleum products, which will settle the market for oil-conveyance steel tubes at a high level.

Experts suggest that the demand for small-diameter welded tubes in EU member-states will recover in 2000. At the same time, the lack of significant investment projects will cause recession in output of large-diameter welded tubes. The market for seamless tubes is expected to recover somewhat.

• DerzhZovnishInform