TMK Q3 pipe shipments up by 15pct over Q2 due to demand
Tuesday, 20 Oct 2009
The Russian pipe producer TMK Group 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%QoQ to 716,000 tonnes 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 tonnes in Q3 up by 8%QoQ. This sizable increase is attributed to the growth in demand from TMK key oil and gas customers. Meanwhile, in Q3 TMK also increased its shipment volumes in the premium segment by 49%QoQ to 43,000 tonnes 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% and 47%.
However, as a result of the sharp H1 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%YoY in its pipes shipments to 1.92 million tonnes. Meanwhile, due to the successful launch of Volzhsky longitudinal welded large diameter pipe mill, TMK LD shipments started to pick up in the Q2 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 tonnes up by 52%QoQ on the back of increased oil and gas pipe demand, especially for OCTG products.
TMK expects its US assets to reach a 70% 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.
The company said in its statement "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 H1 of the year, the company expects full year 2009 shipment volumes to remain below 2008 volumes."
