In May CIS seamless pipe manufacturers lifted their export prices amid rising production costs and better demand in the international markets from the oil and gas sector. However, CIS seamless pipe producers now expect a decline in round billet prices following a drop in global quotations for semi-finished products. Export prices of seamless pipes from the CIS may decline in the coming period in response to a seasonal slowdown of demand in the export markets.
Prices for seamless pipes for general purposes mostly depend on production costs. Offers of round billet from Ukraine's Dneprovsky (Dzerzhinsky) were being given to Ukrainian mills at $615-620/mt ex-works for May production, while billet from OEMK (Russia) were available to Ukrainian mills at $620/mt DAF. Following the decline in export prices for square billets, Ukrainian seamless pipe producers expect that round billet prices may go down and stabilize at the level of $600/mt for June production.
Ukrainian seamless pipe producer Interpipe has already decreased its export offers by $150-170/mt over the past month. It is expected that the decline in export prices from Dnepropetrovsk Tube Works will be significant, also due to expectations that domestic feedstock prices will decrease. The export price policy of Russian pipe makers in the coming period is not sufficiently clear as they have support from the domestic oil and gas sector. However, their exports are also very important. Thus, Russia's largest pipe maker TMK plans to increase output by at least 20 percent this year on the back of higher demand from US shale gas producers. The intensive development of US shale plays has continued to fuel demand for high grade products suitable for these unconventional developments and has allowed TMK to increase pipe shipments.
Export prices from Ukrainian mill Interpipe for June-July production hot-formed seamless pipes of 42-377 mm diameter, of 10, 20 steel grades, as per GOST 8731/8732, currently vary in the range of $850-900/mt FOB. 2"-6" seamless pipes of grade B, as per ASTM A106/API 5L, are offered by the same producer at an average of $900-950/mt FOB. In January to April 2010, the pipe producing subsidiaries of Ukraine Interpipe Corporation increased their steel pipe output by 2.03 times to 244,700 metric tons.
Ukraine's Dnepropetrovsk Tube Works is going to decrease its export quotations of seamless pipes; however, the new price levels have not yet been clarified. The most recent export offers of May production seamless pipes of 57-168 mm diameter, of 10, 20 steel grades according to GOST 8731/8732 were at $1,180-1,200/mt FOB. A representative of the mill informed SteelOrbis that there were almost no deals at those high prices.
Russian seamless pipe producer Uraltrubostal (Pervouralsky Novotrubny Works) has stopped giving export offers in anticipation of falling prices for seamless pipes in line with the declines in round billet quotations. Uraltrubostal has quoted for export July production hot-formed pipes with diameter of 33-219 mm made to GOST 8731/8732 from 10, 20 steel grades produced by Pervouralsk Pipe at $1,020-1,050/mt FOB. ChTPZ Group, which consists of Chelyabinsk Tube Rolling Plant and Pervouralsky Novotrubny Works, has announced that in the first four months of 2010 its pipe deliveries increased by 31 percent year on year to 474,200 metric tons.
There are no export offers from TMK for the moment. For reference, export prices for May production seamless hot-formed pipes with diameter up to 219 mm of 10, 20 steel grade made to GOST 8731/8732 from Russian producer TMK's subsidiary Volzhsky Pipe Plant were at about $950-960/mt FOB. Seamless pipes with 114-219 mm diameter of 10, 20 steel grade made to GOST 8731/8732 from Tagmet are quoted in the range of $1,080-1,100/mt FOB. Seamless hot-formed pipes with 73-168 mm diameter, of 10, 20 steel grade, made to GOST from Sinarsky PP are quoted at $1,090-1,100/mt FOB. Export offers of seamless hot-formed pipes with 219-355 mm diameter, made to GOST by Seversky PP are at $1,000-1,010/mt FOB.