Ukraine's largest pipe manufacturer Interpipe started producing steel billets in 2012, a new achievement on its way to vertical integration. Duncan Pell, Interpipe's sales director for the Middle East and North Africa, explained Interpipe's recent investments and the vision of the company.
Is it possible to give a brief history of Interpipe and a short description of its current operations worldwide? Can you give details of Interpipe's sales and marketing organizations?
Interpipe has been working in the steel manufacturing industry since 1895 with its first seamless pipe produced in 1895 and its first OCTG product manufactured in 1957. In 2012, Interpipe launched its new state-of-the-art electric steel melting facility, which was the last step in finalizing its vertically-integrated model.
The company structure includes five production sites, including the scrap processing mill, a state-of-the art electric steel melting complex and three pipe production mills.
In 2012, Interpipe produced over 1.1 million metric tons of steel pipes and 200,000 metric tons of railway wheels for customers in over 80 countries. Interpipe operates regional offices in North America (Houston, US), the Middle East and North Africa (Dubai, UAE), Europe (Lugano, Switzerland) and the CIS (Astana, Kazakhstan; Moscow, Russia).
What role does Interpipe Steel play in the group?
2012 is undoubtedly the year which marks the start of a new era for Interpipe. Having launched the new mill, we completed the transition to a vertically-integrated structure. This certainly provides benefits for our customers. The state-of-the-art in-house steel mill provides us with high quality steel from carbon to low alloy grades and will ensure comprehensive quality monitoring at every critical step of steel billet manufacturing.
When the mill reaches its designed capacity rate, the self-sufficiency in billets for Interpipe's seamless pipe production will rise to 90 percent. The production capacity of the new mill will be 1.32 million metric tons a year, making it the largest enterprise of this kind in eastern Europe. Investments in the project totaled $700 million.
January 17, 2012 was the date of the first steel output by Interpipe Steel, and it produced 500,000 metric tons of steel in the twelve months since then. When do you expect to achieve the project capacity of 1.32 million metric tons?
As per March production results for Interpipe Steel, its steel billet output amounted to 110,000 metric tons. The mill produced 88,000 metric tons in January and 90,000 metric tons in February. So we can see that the monthly production volumes are rising each month. In terms of monthly figures, the mill will reach its planned capacity in 2013, reaching the full annual output figure in 2014.
What are Interpipe Steel's target sales markets? Can you share your development and strategy plans with our readers?
Interpipe Steel is committed to the production of steel billets for internal needs. Steel billets produced at the mill feed the company's two major seamless pipe producers - Interpipe NTRP and Interpipe Niko Tube.
What contribution does Interpipe Steel make to the Ukrainian economy? Do you have new Ukrainian projects?
Interpipe Steel is the first metallurgical plant to be built from scratch in Ukraine in the last 40 years. Interpipe Steel is also the largest single private investment since Ukraine became independent. The total volume of investments has amounted to $700 million. The mill combines innovative steel melting technologies from one of the top three metallurgical equipment producers, Italian plantmaker Danieli, and works on the basis of international best practices in steel production. This combination creates a new metallurgical production philosophy for the 21st century - a new step forward for the steel industry in the country.
What are the current key markets for Interpipe?
In 2012, the company sold over 1.1 million metric tons of pipes, which exceeded its 900,000 metric tons of shipments in the previous year by 15-20 percent. Interpipe considers the North and South Americas, along with the Middle East and North Africa (MENA) region as its strategic markets for growth.
The company has substantially increased sales of oil and gas pipes in North America, which is considered to be one of the biggest markets in the world. This market grew 12 percent from 2011 to 2012. Company sales rose by 35 percent in the NAFTA area in 2012.
The second key market is the Middle East and North Africa. In this region, oil and gas pipes are traditionally in demand. Interpipe's share in this market exceeds five percent.
How is Interpipe represented in the Middle East market? What can Turkish/European/Middle Eastern customers expect from Interpipe? Do you have new projects and/or advantages?
Interpipe, known as Interpipe ME Fze in the MENA region, has over 12 years of experience working in the Middle East and North Africa. The company's regional office established in 2007 in Dubai is geographically positioned to ensure that Interpipe ME has good access to a number of key markets in the region, including the GCC countries, Turkey and Syria. The Middle East office also sells its products to African countries, with a focus on North Africa.
In the Turkish market, we have signed a one-year agreement with a large pipe distributor in Turkey, Aydin Boru, worth a minimum of $15 million. The deal will see Aydin Boru as a major distributor of Interpipe's seamless line pipes in Turkey. As one of the longest standing companies in Turkey, Aydin Boru has delivered a world class service to the main local consumers for over than 35 years.
Do you plan to expand your presence to new markets?
In recent years, we have expanded our target markets to include India, Pakistan, Vietnam, Malaysia and other countries where we see opportunities. During 2013, we are planning to increase our business with both established customers and with new customers in new markets. Currently, we have some critical mill audits by customers and some trial orders. Confirmation of high quality of the products and conformity with international standards will lay the foundation for new business development.