November 22, 2019 906

ChelPipe announces its operational results for the first nine months of 2019

ChelPipe announces its operational results for the first nine months of 2019
Public Joint Stock Company "Chelyabinsk Pipe Plant" (PJSC "ChelPipe"), a leading manufacturer of pipe products and provider of integrated solutions for the fuel and energy industry companies, announces its operating results for the first nine months of 2019.

Pipe Division

Shipment by product types

ths. tons unless otherwise stated 9M 2019 9M 2018 Chg., % Q3 2019 Q2 2019 Chg., %
Seamless industrial pipes 398 412 (3,4%) 128 146 (12,3%)
OCTG 358 326 9.8% 111 117 (5,1%)
Line pipes (O&G) 101 153 (34.0%) 27 37 (27,0%)
LDP (large diameter pipes) 699 603 15,8% 322 237 35,6%
Other welded pipes 25 27 (7,4%) 10 10 -
TOTAL 1 581 1 521 3,9% 598 547 9,3%

• In nine months of 2019, the demand for large diameter pipes increased by 56 ths. tons (+2%) compared to the same period last year, including: domestic market +104 ths. tons (+6% y-o-y), CIS countries +213 ths. tons (3.5 times y-o-y). Shipments to international projects for the non-CIS countries decreased by 246 ths. tons (-39% y-o-y) due to the completion of two major projects: Nord Stream 2 and Turkish Stream. In nine months of 2019, ChelPipe Group has become the largest supplier of large diameter pipes among Russian manufacturers with a market share of 29%. In nine months of 2019, LDP shipments of ChelPipe Group increased by 15.8% y-o-y and amounted to 699 ths. tons Growth is mainly attributed to higher delivery volumes to the CIS countries - ChelPipe Group supplied large diameter pipes for Saryarka (natural gas pipeline for gasification of Nur-Sultan, the Republic of Kazakhstan) and TAPI (natural gas pipeline Turkmenistan–Afghanistan–Pakistan–India). The Company became the only LDP supplier for the construction of gas pipeline in Turkmenistan under TAPI project.

• Total consumption of OCTG in the domestic market in the first nine months of 2019 increased by 6% y-o-y and amounted to 1.8 mln tons. The increase was due to higher demand for tubing. ChelPipe Group shipments increased by 9.8% y-o-y and amounted to 358 ths. tons. In the reporting period the Company's share in the OCTG market stood at 19%.

• In the seamless industrial pipe segment ChelPipe Group is the largest supplier in the domestic market. Total shipments in nine months of 2019 amounted to 398 ths. tons, a decrease of 3.4% y-o-y. The dynamics is caused by expectations of consumers on decrease in pipe prices in the third quarter of 2019 following a decrease in prices for pipe billets.

• In nine months of 2019, ChelPipe Group shipments of line pipes amounted to 101 ths. tons, a decrease of 34% y-o-y. Negative dynamics was due to decreasing market demand for line pipes as a result of their replacement by cheaper welded pipes.

Trunk Pipeline Division

• Major projects for which ChelPipe Group delivered pipeline fittings in the reporting period: natural gas pipeline Power of Siberia; Chayandinskoye oil, gas and condensate field; construction of the Gryazovets – Slavyanskaya compressor station, natural gas pipeline Saryarka. The total volume of product shipments (hot and cold bends, short-radius bends, stamp-welded fittings, etc.) from JSC "Pipeline Bends" and "ETERNO", LLC (part of ChelPipe Group) was 11.1 ths. tons, 8.5% less than in nine months of 2018 due to the reduction of market capacity.
Increase in the total volume of pipe product shipments in the first nine months of 2019 compared to the same period last year was due to our active work in export markets. The volume of large diameter pipe shipments to the CIS countries increased by 213 thousand tons due to our participation in the Saryarka and TAPI projects. Company’s leadership in the market of seamless industrial pipes, achieved through a unique product range and high quality, is supported by stable volumes of shipments. Strong demand for seamless pipes, as well as supply of large diameter pipes under the signed contracts allow us to count on growth in total shipments of pipe products for the full year of 2019.
Boris Kovalenkov
CEO of PJSC "ChelPipe"
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