Manufacturers of large diameter pipes on the eve of a serious crisis

12.05.2023       

Steel consumption in Russia in the first quarter fell by 3% compared to the same period last year, according to a review of Severstal. The largest drop in consumption is observed in mechanical engineering, which is hit by the departure of foreign car manufacturers. Also significantly reduced the purchase of pipes "Gazprom" against the backdrop of falling gas exports. In addition to the domestic market, a decrease is observed both in steel production and in exports. The main consumers of steel in Russia are construction, mechanical engineering and fuel and energy complex. The largest drop in consumption is observed in mechanical engineering — by 11%, up to 1.1 million tons. The reasons for the decline are the withdrawal of foreign companies from the Russian market, primarily automakers, and problems with the supply of components.
In the fuel and energy complex, the decline was 9% compared to the same period last year due to a decrease in demand for large-diameter pipes (LDP) in the oil and gas sector. “The lack of certainty in the further development of the gas transportation system and the decline in hydrocarbon production do not allow us to give an unambiguous forecast for consumption in this segment,” — noted in the review of the metallurgical company. The main consumer of LDP has traditionally been Gazprom, which, due to the conflict in Ukraine, has lost more than 70% of its main export market in Europe. Although the company has plans to build gas pipelines to China, gas supply contracts have not yet been signed.