Trade in steel tubes between Ukraine and the Russian Federation is still being widely discussed. Looks like every Russian periodical tries to highlight this issue…

STEEL TUBES

STEEL TUBES

UKRAINE

Trade in steel tubes between Ukraine and the Russian
Federation is still being widely discussed. Looks like every Russian periodical tries to
highlight this issue. Thus, such magazines as Eurasian Metals and Profile presented their
understanding of the problem. When analyzing information that appeared in these and other
magazines, the following interesting question arises.

On the one hand, Russians refer to the experiment in
Ukrainian mining and smelting complex, which allows, according to the Profile, to sell
Ukrainian steel tubes at lower prices as compared to the respective Russian-made
commodity. The magazine also says that, according to the data with the Fund of Tube
Industry Development of the Russian Federation, in 2000 Russian enterprises did not get
profit in amount of USD 20,000,000. Besides, it was mentioned that Russian tube consuming
companies are subsidizing modernization of Ukrainian tube works, but not the Russian ones.

On the other hand, according to Eurasian Metals, Russian
metallurgic and tube works continue to perform programs on technical re-equipment.
Modernization of equipment, introduction of new technologies and products is taking place
at such enterprises as Oskolsk Iron & Steel Works (tube billets), Volzhsk Tube Works,
Vyksa Metallurgic Works, Pervouralsk Tube Works, Seversk Tube Rolling Works, Taganrog
Metallurgic Works, and Chelyabinsk Tube Rolling Works. And what about Ukrainian program on
modernization of enterprises of mining and smelting complex?

Therefore, a logical question arises: how do Russian tube
works manage to accumulate funds for purchasing equipment and modernizing production
processes? Probably, the reason lies in different tax legislations in Russia and Ukraine.
It is notable that only experiment in Ukrainian mining and smelting complex allowed
Ukrainian enterprises to accumulate current assets and considerably cut barter turnover.
At the same time, in Russia barter decreased without any experiments.

Let’s now review steel tube production in Ukraine.
According to the data with MetallurgProm, in the first five months of 2001 Ukrainian tube
works manufactured 722,000 tonnes of tubes. This accounts for some 141% of the respective
figure for January-May 2000. However, this is still 17% down from the forecasted output of
steel tubes in Ukraine.

In the five months of 2001, only three Ukrainian tube works
overdid the average monthly output of the last year. These are Lugansk Tube Works
(168.7%), Nikopol Yuzhnotrubny Works (125.5%) and Khartsyzsk Tube Works (124.9%). The rest
of the tube works gradually increased their performance, which reached some 69-97% of the
2000’ level. In January-May 2001, the main manufacturers of steel tubes in Ukraine were
Nizhnedneprovsk Tube Rolling Works, Khartsyzsk Tube Works and Nikopol Yuzhnotrubny Works,
which altogether account for 73% of the total steel tubes production.

According to preliminary data, Ukrainian steel tubes export
in January-May 2001 totaled some 548,200 tonnes worth USD 270,000,000. This is 1.5 times
up as compared to the respective period of 2000, but accounts for some 76% of export in
the last five months of the past year. It is worth mentioning that in May 2001 total steel
tubes export turnover increased by 4.1% against April respective figure (see figure 1).

The structure of steel tubes export from Ukraine in 2001
was the following: seamless tubes – 59.4% against 61.8% in 2000, large-diameter welded
tubes – 25.4% and 20.8% respectively, and other welded tubes – 15.2% and 17.4%.

In the first five months of 2001, the major volume of
Ukrainian steel tubes exports was bound to the CIS countries. These supplies accounted for
79.4% of the total export turnover, or 435,400 tonnes. The share of seamless tubes in
total export totaled 53.5%, large-diameter welded tubes – 31.4% and other welded tubes
– 15.1%.

EU member-states rank the second among main buyers of
Ukrainian tubes and account for 6.4% in Ukrainian export of the commodity. Supplies of
seamless tubes to this region amounted to 81.0%, other welded tubes –19.0%, whereas
export of large diameter welded tubes to the EU totaled 2 tonnes.

Asian countries rank the third in the list of the main
importers of Ukrainian steel tubes, and account for 5.2% of Ukraine’s exports of the
commodity. In January-May 2001, countries of this region imported Ukrainian seamless tubes
(95.8%), large-diameter welded tubes (1.8%) and other welded tubes (2.4%).

Seamless tubes

In January-May 2001, Ukraine exported its seamless tubes to
49 countries against 57 countries in the respective period of 2000. Among them, the main
consumers of Ukrainian seamless tubes were Russia – some 179,000 tonnes, or 55.0% of the
total export turnover, Kazakhstan (23,000 tonnes), Germany (14,400 tonnes), Turkmenistan
(12,300 tonnes), and Italy (11,400 tonnes). These five countries accounted for some 74% of
the total export of Ukrainian seamless tubes. In terms of regional distribution, the main
regions consuming Ukrainian commodity were CIS (71.6% of seamless tubes exports), EU
(8.8%) and Asia (8.5%).

Large-diameter welded tubes

In January-May 2001, large-diameter welded tubes from
Ukraine were exported to ten countries. Russia was the main country consuming the
commodity. It imported 87.6% of the total exportable large-diameter welded tubes from
Ukraine. Uzbekistan ranked the second and accounted for 8.4%.

Other welded tubes

In January-May 2001, Ukraine exported other welded tubes
mainly to the CIS countries (78.6%), including 43,100 tonnes or 51.6% imported by Russia.
Among other regions importing Ukrainian welded tubes the following should be mentioned:
East European countries (8.3%) and EU member-states (8.0%). In total, in 2001 Ukrainian
other welded tubes were exported to 27 countries. The first five main importers of the
commodity accounting for 76% of Ukrainian export were Russia, Uzbekistan (6,300 tonnes),
Germany (5,300 tonnes), Belarus (4,600 tonnes) and Turkmenistan (4,200 tonnes).

In the first five months of 2001 Ukraine imported
approximately 13,800 tonnes of steel tubes worth some USD 13,400,000. It is notable that
hot-rolled seamless tubes made up 74.9% of the total physical import; other welded tubes
– 24.0%, and large-diameter welded tubes – 1.1%. Seamless tubes were imported mainly
from Russia (5,800 tonnes), Austria (2,900 tonnes) and Poland (900 tonnes). These
countries altogether accounted for 92.8% of the total Ukrainian import of the commodity.
Other welded tubes were supplied from Germany (2,000 tonnes) and Russia (700 tonnes),
which accounts for 81.8% of the total import of the commodity in Ukraine. Large-diameter
welded tubes were imported from Italy, the Netherlands, Russia, Poland and the Czech
Republic. By-region distribution of Ukrainian tubes import in January-May 2001 was the
following: 30 countries supplied to Ukraine other welded tubes, 28 countries – seamless
tubes, and 5 countries – large-diameter welded tubes.

Summarizing the data on output, export and import of steel
tubes in the first five months of 2001 and comparing these figures to the 2000’
performance results, one can notice that the situation on Ukrainian market for steel tubes
is quite favorable.

Analysis of the summary data with consideration of average
monthly performance shows that in 2001, as compared to the year 2000, steel tubes output
rose by 4.1%, and exports increased by 3.9% (see table 1).

It is also worth mentioning that Ukrainian domestic market
became more dynamic. Supply of steel tubes to the domestic market (counting in imports)
was 4.5% up against the respective 2000’ figure.

RUSSIA

In the first five months of 2001, Russian tube-makers
retained the positive tendency in steel tubes production.

According to the data with Interfax (the State Statistics
Committee of the Russian Federation), in January-May 2001 Russian enterprises raised
production of steel tubes by 13.8% as compared to the respective 2000’ period up to
2,190,000 tonnes (see table 2). Output of seamless tubes amounted to 993,300 tonnes (up
4.2%), and that of electric-welded tubes – 1,164,800 tonnes (up 23.8%). Average monthly
output totaled 439,100 tonnes, which is approximately 4% up as compared to January-April
2001.

According to Russian experts, increase in steel tubes
manufacture in Russia was a result of general recovery of the country’s economy on the
one hand, and more orders from Russian oil & gas companies on the other.

According to the data with REUTERS Business Briefing
(Interfax), Russian export of steel tubes in May 2001 was 4.3% up against the respective
2000’ figure. Demand for steel tubes on the Russian market increased by 18.7%. On the
whole, some 360,000 tonnes of Russian-made tubes and 60,000 tonnes of imported ones were
supplied to the Russian market.

USA

In December 2000-May 2001, the situation on the US market
for oil tubes was quite ambiguous. The price dynamics shows that maximum of the prices for
the commodity has been already passed, and, if the situation on the petroleum market
remains stable, there would be no price increases in the current year. However, US
government may interfere and accept a decision on regulating imports of metal products.

Average monthly prices for seamless casing tubes made of
carbon steel increased the greatest (by 1.7%), whereas those for electric resistance
welded casing tubes made of carbon annealed steel saw the greatest decrease – down by
1.8% (see table 3).

Vitaly GNATUSH, expert with DerzhZovnishInform

Table 1. Ukrainian market for steel tubes

Table 2. Output of steel tubes in Russia (1998-2001),
‘000 tonnes

Sources: The State Statistics Committee of the Russian Federation,
Interfax* – the data for 10 months

Table 3. Average monthly prices for oil tubes on the
US domestic market (Houston area) in 2000-2001, USD/tonne

Source: PbJSC CherMetInformatsiya Bulletin

Table 4. Production of steel tubes at Ukrainian tube
works

х – Source: MetallurgProm

Diagram 1. Export of steel tubes from Ukraine in
2000-2001