Russia's largest oil companies, Rosneft, Lukoil, Surgutneftegas, Gazpromneft and TNK-BP, have requested the Russian government to prolong the intergovernmental agreement with Ukraine on the duty free import of pipes, as currently Ukrainian products are the only competitive alternative to Russian pipes and serve as an indicator of actual market price levels.
On December 29, 2005, the government of the Russian Federation imposed a five-year antidumping (AD) duty on imports of pipes from Ukraine. However, within the framework of a special agreement, five Ukrainian companies received the right to duty free imports up to a certain quota. The agreement in question ends on December 31, 2009.
"This agreement is one of the best ways to regulate the supplies of imported products to Russia. The termination of the agreement will lead to an undesirable monopoly on Russia's pipe market, will create unfounded preference to domestic pipe companies, and will slow down the development not only of oil but also of other industries which use pipe products," reads the letter sent by the oil companies to the Russian government.
The Ukrainian pipe producers' association UkrTrubProm earlier stated that a compromise in the situation regarding Ukraine's pipe imports to Russia could be the reduction of the existing quotas by 25-30 percent instead of the imposition of customs duties. Meanwhile, according to the estimates of the Ukrainian pipe producer Interpipe, Ukraine's pipemakers will not fulfill their planned yearly quota for the supply of 427,000 mt of pipes to Russia in the current year. "Considering the decrease of pipe demand, we are ready to negotiate the revision of the yearly quota for 2010 and its reduction by 25-30 percent," said the company.
As SteelOrbis previously reported, in September 28, 2009, the Russian government imposed a 28.1 percent special duty on imports of stainless steel tubes and pipes with outside diameter up to 426 mm inclusive for a period of three years. The previous duty on the products in question stood at five to 20 percent. On the other hand, by the decree in question, the Russian government reduced the import duties on spiral-welded steel pipes from 20 to 15 percent.
The main importers of stainless pipes to Russia are Ukraine, China, Brazil, Japan, and the EU countries, particularly Italy.