Steel Pipe Production Down 13.7% yoy in 3M08

Steel Pipe Production Down 13.7% yoy in 3M08

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Company, ths mt                                      3M07    3M08    Chg, %

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Novomoskovsk Pipe (NVTR: U/R)                51.4      87.8        70.8

Kominmet (DMZK: U/R)                             41.0      57.7        40.7

Nyzhnyodniprovsk Pipe (NITR: U/R)           156.8    155.1        -1.1

Dnipropetrovsk Pipe (DTRZ: U/R)                51.5      40.1       -22.1

Khartsyzk Pipe (HRTR: SELL)                      175.5     33.4        -81.0

Other                                                        207.5    216.2       15.2

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Total                                                        683.7     590.2      -13.7

Eugene Cherviachenko: The outstanding growth at Novomoskovsk Pipe is due to a low comparison base, the company’s production is approaching our target of 311 mln mt in 2008. Kominmet boosted production due to a new pipe production line it launched in late 2007 (see our report of Jan. 28, 2008); its 1Q07 results are in line with our forecasts (230 ths mt in 2008; +25% yoy). Production at Nyzhnyodniprovsk Pipe is 4% below our projections. Khartsyzk Pipe’s sharp decline in production confirmed our negative view on the stock. Production at Dnipropetrovsk Pipe was 32% below what we expected. The recent market correction prompts us to put our recommendations for the stocks under review, excluding HRTR (SELL).