12 Jul 2010 13:20

TMK boosts pipe production 55% to 1.9 mln tonnes in H1

MOSCOW. July 12 (Interfax) - Russia's TMK , one of the world's top-three oil and gas industry pipe producers, boosted production of pipe 55% in the first half of 2010 year-on-year to 1.86 million tonnes, the company said in a statement.

Pipe production in the second quarter, 931,000 tonnes, was 0.2% less than in the first quarter.

Product shipments ('000 tonnes):

Q2 2010 Q1 2010 Change H1 2010 H1 2009 Change
Seamless pipe 521 537 -2.9% 1 058 765 38.3%
Welded pipe 410 396 3.5% 805 437 55.7%
Total 931 933 -0.2% 1 864 1 203 54.9%
Incl. OCTG 366 363 0.8% 729 498 46.3%

"Global demand for TMK pipe products continued to improve in the second quarter of 2010. Shipment volumes during this period remained flat as compared to the previous quarter. A slight decrease in seamless pipe shipments was brought on by the downtime associated with the upgrade of Volzhsky's main seamless rolling mill and the scheduled maintenance and overhaul of a rolling mill at Sinarsky. The completion of Volzhsky's seamless mill upgrade program, which included the installation of a new piercing mill, began in April 2010, and will provide the company with an additional 300 thousand tonnes of seamless pipe rolling capacity," the statement says.

"TMK expects the positive market trends to continue in the second half of the year," it says.

"As a result of the strong market environment observed in the second quarter of 2010, the TMK expects EBITDA to slightly increase as compared to the first quarter. Notwithstanding the rise in raw material prices observed in the first half of 2010, the company managed to maintain its profitability levels throughout the second quarter of the year. TMK remains committed to deleveraging its balance sheet. The company paid down some debt in the first half of 2010."

"TMK IPSCO's pipe shipments increased by 20.4% quarter-on-quarter," the statement says. "Gas shale exposure continued to dominate business activity at TMK IPSCO. As a result, capacity utilization levels at TMK IPSCO surpassed the 80% level," it says.

TMK continued to see robust demand in the welded large-diameter pipe segment. "The large-diameter order backlog remains strong and extends into the first half of 2011 from Gazprom's planned implementation of the Bovanenkovo-Ukhta, Pochinki-Gryazovets and Ukhta-Torzhok, as well as existing orders from Transneft and Lukoil , amongst others."

TMK has production facilities in Russia, the U.S., Romania and Kazakhstan. Board chairman Dmitry Pumpyansky is the chief beneficiary. The free float is 23%.