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* Gazprom and Transneft to need 1.8 mln T of LDP in 2014
* Pipe demand down 20-30 pct in 2013
* Russian steelmakers need to consolidate to compete in
By Svetlana Burmistrova and Alessandra Prentice
MOSCOW, Sept 25 Demand for large-diameter pipe
(LDP) from Russian energy firms such as Gazprom could soar up to
50 percent in 2014 as major projects ramp up after delays, the
owner of trading firm Pipe Innovation Technologies (PIT) told
A forecast need for up to 1.8 million tonnes of such pipe
from state-run gas company Gazprom and Russian oil
pipeline monopoly Transneft next year would offset a
drop in demand in 2013.
Key drivers for growth will be the delayed start to building
the South Stream gas export pipeline under the Black Sea to
Europe, and the Power of Siberia link that would supply China if
Gazprom wraps up a long-awaited export deal.
In the absence of such projects, pipe demand would be down
20-30 percent this year compared with 2012, PIT's Ivan Shabalov
told the Reuters Russia Investment Summit.
This year's fall will pose a headache for producers
including TMK and Severstal, struggling to
turn a profit in an industry hobbled by weak prices.
"We see a fall in LDP demand from Gazprom and energy firms
this year ... Next year looks more promising," Shabalov said.
Russia's economy is expected to grow by 1.8 percent this
year - half the rate forecast at the beginning of the year. The
government, meanwhile, plans to cap regulated tariffs charged by
monopolies, including Gazprom, to bear down on inflation.
"Gazprom may cut investment due to the recent government
decision to freeze rates. As a metallurgist I have to take this
into account," Shabalov said.
A tender to supply pipes for the offshore part of South
Stream, which will run 925 km (580 miles) under the Black Sea
before making landfall in Bulgaria, will be awarded in December
or January, according to Shabalov.
Severstal, United Metallurgical Company (OMK)
and ChelPipe are among the Russian pipemakers vying
for the offshore contract alongside some small European firms,
Indian steel producer Tata Steel and Japan's Nippon
Steel & Sumitomo Metal Corp.
MISSING THE BOAT
Shabalov, who has over 30 years experience in the Russian
metals industry, said steelmakers risk losing out to larger
foreign rivals as the dynamics of the global steel market shift
in favour of large-scale producers.
Oversupply, signs of a growth slowdown in China and
stagnation in crisis-hit Europe have sent steel prices tumbling
from all-time highs in 2011, forcing producers to transform
their business strategies.
Pointing to industry consolidation in Japan, he said
Russia's steel industry should be following suit.
Annual crude steel output at Russia's top firms averages
around 10 million tonnes, which is an unsustainable business
model when top global firms are producing 50-100 million tonnes
a year, Shabalov said.
Consolidation, which would cut costs, reduce competition and
prevent oversupply, is unlikely to happen any time soon in
Russia because of the strong personalities of many of the steel
oligarchs who acquired their assets in the 1990s.
"Who will be the first (to consolidate)? The one who's most
flexible," he said. "We're going to lose out in the future if we
(Additional reporting by Andrey Kuzmin, Writing by Alessandra
Prentice; Editing by Douglas Busvine and Matthew Tostevin)