Interpipe OCTG pipe sales surged 66% in 7M21

Railway product sales volume at Ukraine’s largest pipe
and railway wheel producer Interpipe (INTHOL) was 13.2 kt in July, a 15.6% m/m
decrease, according to the company’s monthly operational report released on
Aug. 19. Pipe sales dropped 17.6% m/m to 48.8 kt, while external billet sales
jumped 2.4x m/m to 8.0 kt.

 

The m/m drop in pipe sales in July was led by a plunge
for line pipes (-27.3% m/m to 25.7 kt) that was due to the granularity of
logistics and contract delivery terms, Interpipe said.

 

The m/m drop in railway product sales was also due to
the contract delivery schedule. The company expects its monthly railway product
sales volumes to get back to the level of 15 kt, according to the release.

 

During 7M21, Interpipe’s pipe sales added 11.3% yoy to
306.2 kt, driven by a 66.1% yoy surge for OCTG pipes to 88.3 kt. Line pipe
sales added 7.2% yoy to 176.2 kt, while sales of mechanical pipes advanced
17.9% yoy to 12.5 kt. However, welded pipe sales plunged 37.8% yoy to 29.1 kt
in 7M21 because of the cost pressures due to the rise in HRC prices, Interpipe
said.

 

Railway product sales dropped 19.4% yoy to 96.4 kt in
7M21, driven by a 24.0% loss for wheels to 79.2 kt, partially offset by a 17.9%
increase for wheelsets to 14.2 kt.

 

Interpipe boosted its external billet sales 66.5% yoy
in 7M21 to 37.8 kt.

 

Ukraine’s share of Interpipe’s pipe sales in 7M21
dropped to 17%, or 5pp less than in 2020. At the same time, the share of sales
in the Americas rose 5pp to 16%, MENA’s share added 1pp to 25%, and the share
of CIS countries gained 1pp to 12%. Europe’s share in pipe sales dropped 2pp to
27%.

 

The share of Interpipe’s railway product sales in
Ukraine in 7M21 dropped 4pp from 2020 to 10%, while the share of sales to
Europe retreated 2pp to 33%. The share of sales to CIS countries was flat at
43%, and the share of sales in the Americas added 3pp to 6%.

 

Regarding production volumes, which might be
indicative of sales volumes in the coming months, Interpipe’s pipe production
slid 1.3% m/m to 55.0 kt in July, while railway product output rose 10.4% m/m
to 15.5 kt. However, steel production lost 12.9% m/m in July to 78.1 kt.

 

Dmytro Khoroshun: The yoy
rise in OCTG pipe sales and Interpipe’s outlook for maintaining railway product
sales above 15 kt per month are positive.

 

Interpipe’s railway product monthly sales have
rebounded almost fully to their average 16 kt level for 2020 despite Russia’s ban on railway product
imports from Ukraine, in
force since early February.