The Antimonopoly Committee of Ukraine (AMCU) fined the Ukrainian industrial company Interpipe UAH 69.3 million for violating antimonopoly legislation.
“Today, on October 29, 2020, the Ukrainian industrial company Interpipe has received a fine from the AMCU in the amount of UAH 69.3 million for violating antimonopoly legislation. According to the decision of the AMCU, the fine was imposed in connection with the abuse of a monopoly position in the wheel supply market,” the company’s press release reported on Thursday.
At the same time, Interpipe officially declares that it categorically disagrees with such decision of the AMCU and intends to contest this decision in court.
“As a national producer, we consider the AMCU’s decision to be unfair and unreasonable, taken not on the basis of facts, but on assumptions. The Ukrainian market is open to producers from other countries, and there are no protective duties on the market,” the press release emphasizes.
At the same time, it is noted that by submitting such complaints to the AMCU, unscrupulous competitors are trying to discredit the national manufacturer in order to ensure the supply of products of Russian manufacturers to Ukraine.
The statement also recalls that unlike the Ukrainian market, the Russian Federation protected its market from Ukrainian wheels with a 39% protective duty.
Interpipe, an international vertically integrated pipe and wheel company, based on the results of activities in the second quarter of this year is expected to reduce revenue by 16% compared to the previous quarter, to $ 212 million, EBITDA by 44%, to about $ 48 million.
“We expect Interpipe’s Q2, 2020 EBITDA to amount to about $ 48 million, a 44% quarter-over-quarter plunge. Contributions to Q2, 2020 EBITDA by segment (before reallocation of steel segment EBITDA) are expected to be as follows: negative $ 5 million from pipes (flat quarter-over-quarter), $ 38 million from railway products (a 45% plunge quarter-over-quarter), and $ 15 million from steel (26% less quarter-over-quarter),” according to the estimate of Dmytro Khoroshun, an analyst from Concorde Capital, published in the investment company’s bulletin.
“Revenue from seamless pipe sales should have inched up 3% quarter-over-quarter, to about $ 104 million in Q2, 2020, driven by a 6% increase in sales volumes to 103,000 tonnes, offset by a 3% drop in average sales price to $ 1,015/tonne,” the report says.
“We estimate revenue from welded pipe sales will jump 49% quarter-over-quarter in Q2, 2020, to $ 16 million, due to a 43% gain in volume to 22,000 tonnes and a 4% rise in price to $ 746/tonne,” according to the document.
“We calculate Interpipe’s railway product segment revenue will plunge 34% quarter-over-quarter, to $ 84 million in 2Q20, as a 20% drop in sales volume to 46,000 tonnes will be exacerbated by a 17% drop in price to $ 1,822/tonne,” the expert said.
Interpipe international vertically integrated pipe and wheel company in January-March of this year increased payment of taxes and fees to the budgets of all levels and extra-budgetary funds by 3% compared to the same period last year, to UAH 803 million.
The company said on Facebook the amount of contributions to the state budget totaled UAH 547 million, to local budgets some UAH 147 million, another UAH 109 million was transferred as social security tax.
“The Ukrainian industrial company Interpipe and its assets make a significant contribution to filling the state treasury. Last year we updated the record for paying taxes and fees, but we do not stop there: according to the results of the first quarter of 2020 some UAH 803 million were transferred to the budgets of different levels. In addition, given the increased burden on regional budgets due to coronavirus, Interpipe refused tax holidays provided by the Verkhovna Rada and allocated UAH 17 million for the anti-crisis program to combat COVID-19 in Dnipro and Dnipropetrovsk region,” the company said.
As reported, Interpipe in 2019 increased payment of taxes and fees to the budgets of all levels by 50% compared to 2018, to UAH 3.25 billion. At the same time, the amount of contributions to the state budget totaled about UAH 2.167 billion (an increase of 62%), to local budgets about UAH 625 million (38% more). Another UAH 462 million (21% more) was transferred as social security tax.
PJSC Interpipe Nyzhniodniprovsky Pipe Rolling Plant (Dnipro) has built and commissioned a new warehouse at the export site of the company’s wheel-rolling shop, investing $271,000 in the project.
According to the quarterly report of the company, at the beginning of 2020, Interpipe plant provided itself with an additional warehouse for finished products, and a collection point was established for packing additional volumes of wheels in pallets.
“The new storage was organized to reduce the cost of packaging for sending railway wheels for export,” it said.
In addition, the company began using wooden pallets instead of metal cassettes for products that are shipped to Europe by truck, transported by road.
The report also states that in March steel indices in the global markets declined due to a sharp drop in demand. At the same time, the cost of scrap metal HMS 80/20 CFR Turkey fell by $20.7/tonne, or 7.6% compared to the previous month, the cost of square billets FOB Black Sea by $18.1/tonne or 4.7%.
“Most of the traditional trade outlets for steel billets of CIS production were inactive due to blocking and restrictive measures introduced by the governments during the pandemic. The demand was seen mainly in China,” the report said.
The Ukrainian market has also suffered due to protective measures in the fight against coronavirus, in particular, the hryvnia has depreciated by 14.3% since the beginning of March, construction volumes were down. The output of railway wagons also decreased.
Interpipe, the international vertically integrated pipe and wheel company, increased steel production by 4.8% in January-February of 2020 compared to the same period in 2019, to 138,200 tonnes.
According to the company’s monthly report on Thursday, March 19, pipe production decreased by 32.9%, to 70,500 tonnes, railway wheel production increased by 20.3%, to 17,500 tonnes for two months.
In February, production of steel amounted to 72,900 tonnes, railway wheels amounted to 18,100 tonnes, pipes amounted to 38,400 tonnes.
The company increased sales of round steel billets by 36.3%, to 4,400 tonnes, railway wheels by 43.2%, to 39,600 tonnes and reduced pipe sales by 31.3%, to 66,800 tonnes in January-February of 2020.
It is also reported that pipes were sold in Europe (35%), MENA region (22%), Ukraine (18%), the American continent (13%), the CIS (10%) and other regions (2%). Railway wheels were sold in the CIS (47%), Europe (30%), Ukraine (14%), MENA region (3%), the U.S. continent (4%) and other regions (2%) in January-February of 2020.
According to the company’s statement, the increase in sales of OCTG (oil country tubular goods) in February compared with January was due to an increase in supplies to Africa and the CIS countries, as well as stable supplies to other regions. The main part of the growth in sales of gas and oil pipelines was supported by the countries of the Middle East, Turkey and Ukraine.
“Mechanical pipes showed lower productivity compared to January due to a slowdown in industrial activity in Europe. Negative dynamics of railway wheel sales in February (14.7% less compared to January) is mainly due to the elimination of finished products overstock, accumulated in 2019, which was observed in January,” reads the statement.
The Ukrainian industrial company Interpipe has designed, developed and tested a new connection Intrepid-SP, devised specially for the North American market.
According to the company’s press release, this product serves for the construction of directional and horizontal wells in order to extract shale oil and gas which are in hard-to-reach layers – shales, dense sandstones and limestones. Due to the “shale revolution” and new drilling technologies the United States doubled its oil production over the past decade.
At the same time, the purpose of Intrepid-SP is to maintain the column gas tightness under a complex load and ensure its safe rotation during descent. Such rotation is a necessary technological condition for the construction of horizontal sections of wells with large deviations from the vertical.
Intrepid-SP may also be used for the exploitation of traditional deposits but with hard-to-recover reserves, for example, in multilateral wells with horizontal endings or a new horizontal section is “added” to the main well of an existing well.
Interpipe CFO Denys Morozov said that to expand the line of threaded connections for oil and gas production entering new market segments.
“The new connection was developed considering the peculiarities of the North American market and is intended for companies that develop complex deposits. Intrepid-SP was tested in an independent laboratory. We are going to deliver the first shipment by the end of the year,” the top manager said.