Anatoly Sedykh, the president of the United Metallurgical Company

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he dismal mood in Russia’s depressed market of pipe products is again giving way to optimistic expectations. Experts’ positive predictions are backed by plans of the industry’s majors. Anatoly Sedykh, the president of the United Metallurgical Company, shed light on these plans in an interview with Eurasian Metals.

EM: What your company’s investment plans are for 2003?
– The volume of investments in equipment and technologies at the company’s leading enterprise, the Vyksa Steel Works, should reach $40M to $50M. Funds will go, first of all, to develop wheel production and modernize shops that manufacture large- and medium-diameter pipes. Recently we signed a contract with SMS Meer for supplying equipment needed to produce high-quality pipes of large diameter. At the end of 2003 the Vyksa Steel Works will start production of 1067-mm straight-line-seam pipes matching the best international standards. Capacities are designed to put out between 80,000 and 100,000 tpy. There are also plans to upgrade the nondestructive control equipment, to expand the site of anticorrosive coating and to increase production of pipes of corrosion-resistant steels.

EM: What types of products, in your opinion, will be in demand the most?
– We are predicting that under favorable economic conditions the pipe market will grow 4%. The increase in the sector of large-diameter pipes will equal 11% and it will amount to 9% in the sector of pipe casings as well as 11% and 7% in the sectors of profile and water-and-gas pipes respectively. In 2003 the Vyksa Steel Works and our other enterprise Almetyevsk Pipe Plant plan to market 940,000 tons of pipes.
The railroad wheel market will probably ramp up 4%. In 2003 the Vyksa Steel Works intends to sell 575,000 railroad wheels and raise in the immediate future their production volume up to 700,000 so as to meet the demand by Russian and foreign consumers. The mill is shipping its wheels to 15 countries of the world and among the mill’s customers are such well-known companies as Samsung and General Electric.

EM: And how export shipments of pipes look like in general?
– In 2002 we increased them 26%. There was a demand, mainly, for pipes of large and medium diameters made by the API standards. Our pipes are popular with Mitsui, Exxon Mobil and a number of other large companies. In 2003 the United Metallurgical Company hopes to expand its presence in the U.S. market as well as in markets in the Middle East. To this end we are trying to participate in international tenders more often. In this sense 2002 was successful for us. In November the Vyksa Steel Works won the tender for supplies of main pipes within the Sakhalin-1 project held by its operator Exxon Neftegaz Ltd. Supplies are to start in the first quarter of 2003. It is already our second victory at Sakhalin-1 tenders. The company won the first one for supplying pile pipes in April 2002. In December 2002 the United Metallurgical Company participated in a tender to supply pipes for the Sakhalin-2 project. We are keeping our fingers crossed.

EM: What problems might emerge for your business in 2003?
– We hope that 2003 will be a success for us. As for problems, they are, of course, possible. A new recession like the one in the first half of 2002 is not ruled out. All will depend on the behavior of oil companies, on their investment activity. Today the situation is favorable: prices of oil are high (the price of $30 a barrel is 30% higher than a year ago) and there is no downtrend so far. We will be hoping that oil companies will use the opportunity and make long-term investments in developing production. It means that there will be new orders for pipes.