Interpipe OCTG pipe sales surged 30% in 5M21

Railway product sales volume at Ukraine’s largest pipe
and railway wheel producer Interpipe (INTHOL) was 15.0 kt in May, a 13.5% m/m
increase, according to the company’s monthly operational report released on June
17. Pipe sales added 9.1% m/m to 48.9 kt, while external billet sales rose
13.8% m/m to 8.0 kt. Total sales volume advanced 10.5% m/m to 71.9 kt.

 

The m/m increase in railway product sales in May was
driven by sales of wheels (+16.6% m/m to 11.5 kt) amid a robust demand from
Belarus and Kazakhstan and expansion of cooperation with the national railway
operator in India, according to the report.

 

The m/m advance in pipe sales in May was led by a
surge in line pipes (+18.5% m/m to 29.9 kt), driven by a growth in demand in
Europe the U.S. following the easing of quarantine measures Interpipe said.

 

During 5M21, Interpipe’s pipe sales added 6.1% yoy to
198.8 kt, driven by a 29.6% yoy surge for OCTG pipes to 51.9 kt. Line pipe
sales inched up 2.1% yoy to 115.2 kt, while sales of mechanical pipes jumped
30.9% yoy to 8.6 kt. However, welded pipe sales dropped 17.3% yoy to 23.1 kt in
5M21, as pipe prices lagged behind the rallying hot-rolled coil prices, the
report said.

 

Railway product sales plunged 28.0% yoy to 67.6 kt in
5M21, driven by a 35.5% loss for wheels to 53.3 kt, partially offset by a 37.0%
jump for wheelsets to 12.1 kt.

 

Interpipe boosted its external billet sales 74.3% yoy
in 5M21 to 26.5 kt.

 

Ukraine’s share of Interpipe’s pipe sales in 5M21
dropped to 17%, or 5pp less than in 2020. At the same time, the share of sales
in the Americas rose 3pp to 14%, MENA’s share added 1pp to 25%, and the share
of CIS countries advanced 1pp to 12%. Europe’s share in pipe sales was
unchanged at 29%.

 

The share of Interpipe’s railway product sales in
Ukraine in 5M21 dropped 6pp from 2020 to 8%, while the share of sales to Europe
retreated 3pp to 32%. At the same time, the share of sales to CIS countries
rose 5pp to 48%, and the share of sales in the Americas added 4pp to 7%.

 

Regarding production volumes, which might be
indicative of sales volumes in the coming months, Interpipe’s pipe production
added 6.9% m/m to 51.6 kt in May, while railway product output slid 11.4% m/m
to 13.0 kt. Steel production lost 3.6% m/m in May to 86.0 kt.

 

Dmytro Khoroshun: The
increases of OCTG pipe and external billet sales in 5M21 are positive.

 

However, it remains to be seen whether Interpipe
will be able to maintain its railway product sales at 15 kt per month, which
the report mentioned as a sustainable monthly level. Russia’s ban on railway product
imports from Ukraine, in
force since early February, will continue to depress Interpipe’s sales volumes
throughout 2021, we think.