Interpipe notes a possible decrease in output in April-September by 30-50% due to the drop of oil prices, the decrease of main oil and gas pipes consumers’ activities and the COVID-19 pandemic.
“We have several scenarios of operation in Q2-3. According to our estimates, the drop in output could be 30% to 50%”, the company CEO Faidi Khraibe said.
One of the main factors is the drop of global oil prices. In March, prices fell to their lowest in 17 years, to $24-27 per barrel. With such price, oil extraction in US becomes unprofitable. Moreover, Interpipe products fall under a 32% duty on US market.
The second factor is the decrease of pipes consumption on domestic market. The state enterprise Ukrgazodobycha has cancelled its program to increase gas extraction.
The third factor is the affect of the coronavirus on European economy. Most European car manufacturers have announced the shut down of the manufacture for an indefinite term. The operation of other industrial enterprises has also been suspended. European GDP is expected to fall, resulting in the decrease in pipe consumption. (Ukrainian metal)