New style for pipe makers

OTZ is developing the pipe components market

CJSC United Pipe Plants (OTZ), the flagship of which is OJSC Chelyabinsk Pipe Rolling Plant (ChTPZ), announced the completion of the creation of a vertically integrated group. OTP is going to dominate the market of shaped products - parts used in the installation of pipelines, pumping stations, branches, turns. A special place in the OTP product range is occupied by bends for large-diameter pipelines used by the fuel and energy complex.

It is difficult to say whether the business of producing OTP pipe parts will affect the receipt of orders for the supply of pipes themselves for large projects of oil and gas companies. However, the fact that integration is a smart move from the point of view of marketing policy is beyond doubt among pipe makers and analysts. In addition, business diversification, experts note, will allow OTP to feel more confident in the market.

The consolidation of more than 75% of the shares of the Moscow OJSC Plant of Special Assembly Products (ZSMI) and CJSC Magnitogorsk Plant of Mechanical Assembly Preparations - Vostokmetallurgmontazh (MZMZ) (produces up to 18 thousand tons of bends and 9 thousand tons of transitions per year) has already been completed. previously purchased from private shareholders for $7 million. Despite the fact that so far these enterprises are only at 50% capacity, OTZ is already starting to implement a new project worth $30 million to build a plant in Chelyabinsk by 2004 to produce 10 thousand tons of bent bends for large diameter pipes (LDP). The new plant will feature high technology, while modernization is planned at ZSMI and MZMZ. In addition, over the course of five years, OTP plans to spend $150 million on the reconstruction of its main asset, ChTPZ, and the same amount, according to Komarov, on the purchase of new enterprises both in Russia and Eastern Europe.

There is serious competition in the pipe market between players who have already formed holdings. The largest are the Pipe and Metallurgical Company (TMK), which accounts for about 60% of the total production of pipe products and 20% of large-diameter pipes in Russia, and the United Metallurgical Company (OMK) - 20% and 40%, respectively.

Strengthening their position in the pipe market, TMK (four pipe factories) and OMK (two factories) relied on increasing production volumes. CJSC OTZ, which includes the third-largest ChelPipe Plant in terms of production volumes (14 and 40%, respectively), is taking a different path - it is focusing on expanding the range of products for the pipe industry.

It must be said that in this field OTP will have significantly fewer competitors than in the pipe market: the sector of production of components for the oil and gas sector, although represented by 90 companies, is not structured, and its participants are small and disunited. Neither OMK nor TMK have enterprises specializing in this sector. OMK states that it is not considering entering the market of shaped products and will continue to specialize exclusively in pipes. TMK also confirmed that it has no such plans. The only major player in the pipeline equipment market is Chelyabinsk OJSC Trubodetal, affiliated with Gazprom. But the required reconstruction of the enterprise's assets threatens the supply of components for the construction of major pipelines. Transneft experts are paying attention to this, and they plan to rely on it in the OTP. Vice-President of Transneft Sergei Grigoriev told the Vremya Novostey newspaper that there are no specific agreements with OTP yet, adding that the company doesn’t care who to buy from, the main thing is the price-quality ratio.

However, Chairman of the Board of Directors of OTZ Andrey Komarov and General Director of ChelPipe Vitaly Sadykov, believing that pipes cannot last forever, much less straight, have no doubt that orders for pipe parts are guaranteed to them, taking into account the grandiose pipeline projects (BPS, Angarsk- -Daqing, Northwestern Pipeline, Talakan). By 2005, the tap market is expected to grow by at least 50%. Now, according to Mr. Komarov, there is a deficit on the market that needs to be covered (this was also confirmed by Sergei Grigoriev). In addition, OTP plans to replace imports with its products, which, as the company assures, will be quite competitive. Its volumes are estimated at 30-40 million dollars. In general, the market for pipe parts is estimated at 200 million dollars, with bends accounting for 40 million dollars. By 2005, OTZ is going to conquer 60% of the market for bends (now the share of ZSMI and MZMZ is 20 %).

Maya ALEXEEVA