Interpipe reduced sales by 17% at the end of the year

Author

Maksim Nechiporenko

In 2020, Victor Pinchuk's pipe and wheel company Interpipe reduced sales of pipe and railway products in tonnes by 17%, and sales volume amounted to 662.4 thousand tonnes.

The exports share in the sales structure amounted to 81%, while the share of the Ukrainian market decreased from 24% to 19%, the company’s press service reports.

Sales of pipe products fell by 21% compared to 2019 and amounted to 469.9 thousand tons. The main factor is a decrease in pipes’ demand for oil and gas production due to the decrease in oil prices in the first half of 2020.

Pipe supplies to the Ukrainian market decreased by 31% compared to 2019 and reached 102 thousand tons. The main factor is the curtailment of the gas production program by Ukrgazobycha that cut the program for drilling new wells by almost 4 times in 2020. Shipments to private gas producers remained approximately at the 2019 level.

The US market also contracted for Interpipe. Decrease in hydrocarbon prices and bankruptcies of many oil companies have reduced demand for OCTG pipes. In addition, Ukrainian pipe products are subject to a total duty of 32.5% in the United States. As a result, the company's pipe sales in the Americas decreased by 63% to 52 thousand tonnes.

Interpipe delivered 137 thousand tons of pipes to European clients (-6% compared to 2019) due to the lockdown policy. In addition, the European market is limited by import quotas that do not take into account the capacities of the Vallourec Niko Tube JV.

In the Middle East, Interpipe received a 9% increase in sales to 111 thousand tonnes. This was facilitated by the start of selling premium UPJ-F joints to Turkey and line pipes to the leading oil producers—Abu Dhabi National Oil Company and Qatar Petroleum.

"The share of Interpipe's sales to export markets exceeded 80% at the end of the year. We entered new segments and supplied our production to market leaders. The pipe division successfully shipped premium threaded joints products to Turkish Petroleum, line pipes to ADNOC (Abu Dhabi National Oil Company) and Qatar Petroleum. The wheel division has been certified and carried out the first supplies of passenger railway wheels for high-speed trains Deutsche Bahn," commented Denys Morozov, Director for Finance and Economics at Interpipe.

According to him, Interpipe, as an exporting company, has seen an increase in protectionism in key markets throughout the year.

"The pandemic has strengthened the desire of other states to provide orders, first of all, to their producers by tightening quotas, introducing anti-dumping duties and other instruments directed against importers. On the other hand, within Ukraine, Interpipe was under pressure from high electricity prices. Consumption and prices for key energy resources in the world—oil, natural gas and coal—were falling, while in Ukraine, electricity tariffs for industry were growing," he explained.

Morozov added that in 2021 Interpipe plans to complete the construction of an additional workshop for the wheelsets production and begin new facilities construction for the production of pipes with premium threaded joints for oil and gas production.

Interpipe is a domestic manufacturer of seamless pipes and railway wheels. The company's products are supplied to more than 80 countries of the world through a network of sales offices located in key markets of the CIS, the Middle East, North America, and Europe. In 2020, Interpipe sold 662 thousand tons of finished products, including 192 thousand tons of railway products. Railway products are sold under the KLW brand.

The company employs 11,000 people. In 2019, the company transferred 3.25 billion UAH to the budgets of all levels.