TMK Announces Production Results for 2008

For the year 2008, TMK shipped 3,227 thousand tn of steel pipes, representing a 5.0% increase over 2007 full year shipment volumes (‘’Shipped” refers to shipped from TMK plants for subsequent sale to customers). 

Volumes of shipped pipe products

(thousands of tn)

The growth in shipment volumes was mainly attributable to an increase in pipe production brought on by the consolidation of North American production assets in mid-2008.  TMK IPSCO, specialised in the manufacturing of seamless and welded oil country tubular goods (OCTG), had a positive impact on the Company’s third and fourth quarter shipment volumes.  The newly acquired assets further improved TMK’s product mix, resulting in a growth in seamless and welded OCTG pipe shipments, including premium connections. 

Without TMK IPSCO’s contribution, the Company shipped 2,738 thousand tn of pipes in 2008, down 11% year-on-year. This decrease was primarily caused by the shutdown of Tagmet’s seamless operations for the first nine months of the year, a 38.6% drop in large-diameter (LD) shipments brought on by the postponement of a number of large pipeline projects and weakening demand for industrial seamless tubulars in the fourth quarter.

Thanks in part to its diversified product mix, TMK performed better than the Russian market and, despite a drop in production volumes, managed to increase its market share in Russia.  Whereas TMK 2008 LD shipments contracted 38.6% over 2007, the Company nonetheless fared better than the Russian LD market which registered a 42% drop over the same period.  Driven by strong market demand for line pipe, the Company redirected some production from OCTG to seamless line pipe to take advantage of that segment’s attractive pricing and higher profitability as rolling capacities for line pipe and OCTG are interchangeable.  TMK also managed to increase shipments of ERW OCTG from its Seversky-based ТМК-CPW joint venture.

TMK continued to improve its position in the Russian premium threaded oil and gas pipe segment with a 20.6% increase in premium connection shipments.  From its Russian plants, TMK shipped 94.4 thousand tn of premium connections in 2008 compared to 78.3 thousand tn the previous year.  In North America, following its consolidation on June 12^th, 2008, TMK IPSCO shipped a total of 91,438 premium connections or approximately 24 thousand tn.

The ramp-up of the equipment launched in the fourth quarter of 2008 is on schedule and is to be completed in the second quarter of 2009.  Going forward, TMK expects demand to pick up in the large-diameter segment and the successful launch of Volzhsky’s new longitudinal LD welded mill coupled with existing spiral welded LD capacity will enable the Company to take part in all upcoming Russian and CIS tenders.  On the seamless side, the company’s core oil and gas pipe segments are set to benefit from the ramp-up of Tagmet’s Premium Quality Finishing (PQF) mill and its globally recognised high quality production standards. Furthermore, a more advanced product mix will enable the Company to improve pricing and limit its exposure to competition from low-end imported products.