Khartsyzsk Pipe cuts pipe production 43% mom in May

Khartsyzsk Pipe (HRTR UK), a Ukrainian manufacturer of large diameter pipes and Metinvest subsidiary, decreased production 43% mom in May to 23 kt, which put its 5M12 output at 270 kt (still up 9% yoy), Interfax reported last week.

Roman Topolyuk: The production decrease in May is related to the completion of contracts for pipe deliveries to Kazakhstan and Turkmenistan. According to Metal Courier, the current outlook is uncertain, and no increase in output is expected. The plant’s low capacity load is similar to the situation with its Russian competitors. We anticipate that 2H12 might bring new orders in Russia, primarily for Russian producers and some for Khartsyzsk. Otherwise, if Khartsyzsk Pipe maintains May’s production level, it would may end up with 407 kt in output in 2012 (down 35% yoy) and a more than 50% lower bottom line at around USD 49 mln.