TMK’s Q3 pipe shipments up 15 percent over Q2 due to demand recovery

Tuesday, 13 October 2009 12:15:59 (GMT+3)   |  
       

The Russian pipe producer TMK Group (TMK) expects that the implementation of large scale oil and gas pipeline projects will contribute to a further increase of its shipment volumes in the fourth quarter of 2009, although full year shipments will remain below 2008 volumes due to the first half drop.

Accordingly, in Q3 2009 TMK increased its pipe shipment volumes by 15 percent quarter on quarter to 716,000 mt, due to the start of a recovery in demand for pipe products and the strengthening of the company's market share.

TMK's OCTG and line pipe shipment volumes reached 377,000 mt in Q3 - up eight percent quarter on quarter. This sizable increase is attributed to the growth in demand from TMK's key oil and gas customers. Meanwhile, in Q3 TMK also increased its shipment volumes in the premium segment by 49 percent quarter on quarter to 43,000 mt, and also upped its shipments of industrial pipes, in order to meet the increase in demand. Depending on the segment, the growth in industrial pipe shipments varied between 20 percent and 47 percent.

However, as a result of the sharp first half decrease in demand for pipe products, the shipment volumes for the full year 2009 will remain down. During the first nine months of 2009, TMK registered a decrease of 21 percent year on year in its pipes shipments to 1.92 million mt.

Meanwhile, due to the successful launch of Volzhsky's longitudinal welded large diameter (LD) pipe mill, TMK's LD shipments started to pick up in the second quarter of this year, and are expected to register a "significant growth" in H2 with the implementation of Gazprom and Transneft projects, such as Sakhalin-Khabarovsk-Vladivostok gas pipeline and the second phase of the Baltic pipeline system.

In addition, the pipe shipments from TMK's American division, TMK IPSCO, have also registered a significant increase in the third quarter of the current year, reaching 96,000 mt - up 52 percent quarter on quarter, on the back of increased oil and gas pipe demand, especially for OCTG products.

TMK expects its US assets to reach a 70 percent utilization rate by the end of the year. These expectations are largely conditional to a recovery in US gas prices, and, given their current low levels, the company forecasts a steep market upturn in 2010 as opposed to late 2009.

"Positive oil and gas drilling and production dynamics in Russia and North America will further stimulate TMK shipment volumes. Nevertheless, as a result of the sharp demand contraction in the first half of the year, the company expects full year 2009 shipment volumes to remain below 2008 volumes," the company said in its statement.


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