Khartsyzsk Pipe (HRTR UK) plans to produce 16-18 kt of large diameter pipes in July (5.7-6.4x higher mom), after a record low volume of 2.8 kt in June, Metal Courier reported yesterday. June’s low output was partially due to repairs the plant decided to undertake while it lacked new large orders. According to Metal Courier, the plant’s loaded capacity might be lower again in August, as long as Khartsyzsk Pipe was participating in tenders that might result in new orders only by 4Q12. One of the expected contracts Khartsyzsk Pipe was pursuing by the end of July is not too large; it foresees the delivery of 3.3 kt of pipes to state company Naftogaz of Ukraine.
Roman Topolyuk: 2H12 turned out to be worse in terms of orders for large diameter pipes than what we expected for the company, and no major reversal in order flow has occurred. On the contrary, consumers, including Russian state company Gazprom, decreased its forecast for demand for the next two years. With regard to the current outlook for Khartsyzsk Pipe this year, we expect the plant to produce slightly more than 400 kt of pipes (-35% yoy), which implies cutting expected EPS by twofold yoy to USD 0.02 per share.