November 20, 2008

TMK production results for H1 of 2008

OAO TMK, one of the world’s largest oil and gas pipe producers and the market leader of the Russian pipe industry, has announced production results for January to June 2008.

TMK shipped 1.495 million tonnes of steel pipes in H1 of 2008 down by 5% YoY as compared to the first half of 2007. TMK shipments to the Russian pipe market declined by 7.6% YoY whilst domestic Russian pipe consumption decreased by 11% YoY. As a result, the company increased its Russian market share by 2.2% YoY compared to H1 2007.

The required shutdown of obsolete capacity to install the new PQF mill affected seamless pipe shipments in the first half of the year.
Compared to H1 2007, total seamless shipment volumes fell by 6% YoY to 985,000 tonnes including a 6% decline in OCTG shipments. Seamless pipe deliveries are expected to increase following the scheduled commissioning.

The delays and postponements seen in the implementation of some large scale oil and gas pipeline projects continued to negatively affect the Russian pipe market. TMK partially offset the decrease in large diameter pipe demand with increases in shipments of welded line pipes and industrial pipes. Total welded pipe shipment volumes fell by 3% compared to the first half of 2007 and amounted to 511,000 tonnes.

With the number of pipeline tenders expected to increase in the second half of the year, the large-diameter pipe market outlook remains favorable. TMK is set to benefit from this situation as a new large-diameter pipe mill producing thick walled longitudinal welded pipes coupled with internal and external anticorrosion coating capacity will be commissioned at the Volzhsky Pipe Plant in the second half of this year.