December 02, 2008

TMK pipe shipment in Q1 dip by 8% YoY

TMK one of the world’s largest pipe producers announced its production results for the Q1 of 2008.

TMK shipped 707,000 tonnes of pipes, which is 8% YoY less than in the Q1 of 2007. Despite an 8.5% YoY decrease in demand for pipes at the Russian market in the Q1 of 2008, it managed to increase its Russian market share to 25.7% YoY up from 24.8% YoY in Q1, 2007.

The Q1 2008 sales volumes of seamless pipes down by 7% compared to the Q1 2007 figures and amounted to 485,000 tonnes.

TMK’s shipments in the Q1 2008 are down by 12% amounting to 222,000 tonnes. Nevertheless in March, 2008 the Company increased large diameter pipes sales by 10% against February

TMK release said that “This growth was due to an increase in supplies of line pipes, including anticorrosion coated both seamless and welded line pipes by 7% and 43% respectively. Oil and gas industry, which is now experiencing the shift to oil and gas production in challenging geological conditions, has shown greater demand for such pipes. The demand for such tubular goods in the CIS also enabled the Company to increase its shipments of seamless line pipes by 16%.”

The released added that in Q1 2008 TMK continued implementing its Strategic Investment Program, aimed at increasing production volumes of higher value added tubular goods, improving product quality and reducing costs. The scheduled shutdown of obsolete Pilger mills to be replaced by the state of the art PQF rolling mill at Tagmet rendered significant impact on seamless pipe sales volumes.

However, commissioning of the new 600, 000 tonnes per annum high tech PQF mill scheduled for the Q3 of 2008 will enable TMK to enter the market with new products of a higher quality, including Premium connections, and to increase its seamless pipe shipment volumes at year end. Moreover in Q1 of 2008, despite a 6% decrease in OCTG shipments, the Company continued increasing shipment volumes of drill and tubing pipes by 40% and 2% respectively against Q1 2007 figures.

Delays associated with the implementation of large-scale pipeline projects, such as “Eastern Siberia Pacific Ocean Pipeline” resulted in a decline of the Russian large diameter pipe market. This situation remains favorable for TMK, as in the Q3 of 2008 the Company is going to launch its new welding mill producing longitudinal large-diameter pipes with up to 42 mm wall thickness, which will significantly enhance TMK’s competitiveness and readiness prior to the launch of large scale pipeline projects.