4.8.European Pipe Market

For the full year 2015, the reduced demand and overcapacity led to stronger competition in the European market and downward pressure on prices for tubular products. Additional challenges came from rising imports of seamless and welded pipe from non-EU countries.

Our European division specialises in manufacturing and supplying industrial seamless pipe. In 2015, it was this segment that had the tightest competition from major OCTG manufacturers: prompted by falling oil prices, companies re-focused on manufacturing industrial pipe. These enabled pipe consumers to obtain lower long-term prices and better payment terms due to large inventories.

178 thousand tonnes

of pipe sales volume in the European Division

Despite the challenging market conditions, the European division showed strong operating results in 2015, selling 178 thousand tonnes of pipe, a marginal drop of 3% year-on-year.

To maintain and cement its market position and enter new sales markets, in 2015 the European division implemented a range of initiatives to start using new high added value steel grades and alloys and launch production of new products, targeting mostly the automotive and energy sectors.

In 2015, TMK-ARTROM launched a new finishing shop with an annual capacity of 25 thousand tonnes of pipe. By manufacturing higher added value tubular products, the European division of TMK will be able to offer new premium products for hydraulic and telescopic cylinders. These cylinders are widely used in hoisting machinery, sophisticated industrial equipment, automotive and aircraft industries. Launching the production of pipe for hydraulic cylinders is yet another step towards gaining a foothold in new markets as a manufacturer of value-added products for the engineering industry.

Last year, TMK-ARTROM also successfully tested, under supervision of Gazprom VNIIGAZ, the cold rolling of highly corrosion-resistant pipe from TMK-S chrome and nickel alloy. The Company is planning to launch the commercial production of these products in 2016.

TMK-ARTROM is qualified as an authorised supplier for major companies, such as General Electric, Dacia (a subsidiary of Renault) and NIS (Petroleum Industry of Serbia). In 2015, we enhanced our partnership with Dacia by supplying precision pipe for the automotive industry. In the reporting year, we became No. 1 supplier for this company.