Gazprom Wants More Russian Pipes

YesterdayGazprom asked Russian producers of long-diameter pipes to increase their output to 6 mln mt by 2010 to cover its demand. Gazprom’s official explanation was to lessen its dependence on Ukrainian pipes. Eugene Cherviachenko: We believe the brunt of this move will be felt by Khartsyzk Pipe (HRTR: U/R), which exports more than half of its pipes to Russia. The announcement by Gazprom – Russia’s main demand determinant for LD pipes – is in line with our expectations of increasing competitive pressure in Russia. Starting as early as last year, Khartsyzk Pipe’s market share in Russia has been eroding. In our last meeting with the company, its representatives said that they are boosting efforts to diversify sales destinations and the quality of their products in anticipation of further squeezing of the market.