New seamless pipes capacities of 450,000–500,000 tons that Zagorsky Pipe Works wants to build are excessive for the Russian market, the Fund for Development of Pipe Industry said in a statement.
The fund said that combined capacity of all Russian plants stood at 4.1 million tons, and it was loaded by only 70% as of the start of 2019. Vyksa Iron and Steel Works is already implementing an investment project that would expand capacity to 4.6 million tons until 2022, while demand for seamless pipes in the country grows by 2-4% per year and no rapid growth is expected in the foreseeable future.
“Moreover, the moderate demand growth trend may switch into moderate contraction as the pipes are being partially replaced by seamed analogues from the segment of oil country tubular goods,” the statement read, adding that the existing capacity for seamless pipes should be enough to cover domestic demand least until 2030.
“The fund’s opinion is that the seamless pipes project announced by Zagorsky Pipe Works is excessive for the industry. It would lead to irrational spending of budget money if the government supports the project, it would not result in an increase of industrial production or in substitution of imports,” the fund reported. (Prime/Ukrainian metal)