Interpipe boosts sales volumes 35% yoy in 2017

Interpipe (INPIP), the largest Ukrainian producer
of steel pipes and wheels, boosted its sales volume 35% yoy to 767 kt in 2017, the
company reported in a Feb. 8 press release.

Sales of pipe products increased 31% yoy to
595 kt in 2017 due to growth in Ukraine (29% yoy to 148 kt), America (109% yoy to
90 kt) and the CIS (35% yoy to 140 kt) markets, according to Interpipe.

Sales of railway products jumped 51% yoy to
172 kt in 2017, driven by the markets of the CIS (62% yoy to 89 kt) and Ukraine
(83% yoy to 45 kt), the company noted.

Recall, on Jan. 19 the Eurasian Economic Union
(EAEU) led by Russia and uniting five former Soviet countries (including Belarus,
Kazakhstan, Armenia and Kyrgyzstan) hiked
anti-dumping duties for Interpipe railcar wheels to 34.22% from 4.75%.

Dmytro
Khoroshun: The 89 kt in railcar wheels sold to the CIS
in 2017 will be a high-water mark for years to come after the recent hike in the
EAEU duties, which will certainly depress Interpipe railway product production and
sales this year. Nevertheless, the company noted in its press release that it sold
approximately130 kt per year of railway products in Ukraine during 2011-2012, hinting
that sales volume might increase from the 2017 level of 45 kt. We agree that the
domestic market might be able to support Interpipe’s railway product sales, particularly
considering Ukrzaliznytsia’s ambitious 2018 CapEx plan.

The worldwide revival
of oil and gas drilling activity, which was the reason for the increase in Interpipe’s
pipe products sales in 2017, is likely to continue supporting this segment in 2018.
In particular, as Interpipe noted in the release, the 20/20 strategy (to produce
20 bln cubic meters by 2020) by UkrGasVydobuvannya, Ukraine’s state-owned largest
natural gas producer, has become the major growth driver for pipe product sales
in Ukraine.