Khartsyzk Pipe redirected supplies to Central Asia from Russia

Khartyzsk Pipe (HRTR UK), a Ukrainian manufacturer of large diameter pipes and a Metinvest subsidiary, loaded its capacity with orders for two projects in Kazakhstan and Turkmenistan, Metal Courier said last week. The company’s supplies to the Russian market have been limited so far in 2012: Russia cut its total imports of large diameter pipes by 10x yoy to about 20 kt in 2M12.

Roman Topolyuk: The news comes as the Russian pipe market is weak – large diameter pipe consumption in the country have decreased 2x yoy to 100-150 kt per month. Pipes are only being purchased for maintenance purposes and mainly from local producers. Russia was Khartyzsk Pipe’s key market, which allowed it to demonstrate strong operating performance in 2010-2011. This year the enterprise has reoriented its supplies to Central Asian projects, while maintaining high monthly production – 65-68 kt in January-February (+5% yoy). According to Metal Courier, Khartyzsk Pipe will supply around 20% of the total requirements for large diameter pipes tlo the Turkmen project – 100 kt by mid-2012. Combined with purchases from Kazakhstan, this means that the company is secure in terms of orders until the Russian market reopens for capital projects. The high capacity utilization at Khartyzsk Pipe implies that the company will maintain its strong financial performance (net income in 2011 surged by 4.6x yoy to USD 99 mln).