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NEWS

Update on steel pipe market and mills in Uzbekistan

16 November 2011

http://www.steelguru.com of 11/16/2011 - It is reported that due to the decline in the global demand for steel, Uzbekistan is trying to re align its production towards the manufacture of specialized, high value finished products, but this is being hampered by the lack of raw materials and manufacturing technology.

At an International Industrial Fair in Tashkent last October the management of Uzmetkombinat, the largest steelworks in Uzbekistan, announced the planned launch in 2013 of a large scale production plant for the manufacture of a wide range of steel pipes.
Mr Nariman Umerov Deputy Head of Uzmetkombinat Engineering said "We need to build specialist degassing equipment and launch pipe production as soon as possible. It will help the company not only increase its range of products but also expand its presence in world markets."
The construction of degassing equipment will cost about USD 19 million will have a capacity of 150,000 tonnes of liquid steel per year and improve the quality of the finished products seamless steel pipes with diameters of 25mm to 426mms and cylinder thickness of up to 20mm. It is thought that full production will reach 30,000 tonnes annually by 2015.
The entire project is estimated to cost USD 90 million and will be financed through loans from Uzbek banks and from the company own funds.
Uzmetkombinat has faced the current crisis with the wear -factor of 50%, a reasonable result when compared to other developed countries. This was made possible thanks to a modernization and technical re-equipment program worth USD 49 million which will be completed at the end of 2011. This program has helped the company maintain positive production dynamics during the price crisis: steel output in January to September increased by 2.2% to 572,000 tons and rolling ferrous metals by 1.9% to 553,900 tons.
An analysis of pipe consumption in Uzbekistan forecasts an increase in demand for pipes of small and medium diameter by public services and engineering and construction industries. Steel pipe production is less than 10% of the total country's needs. According to a local analysis company AFS-Research, only five enterprises out of the total domestic manufacturers, with a total capacity of no more than 70,000 tonnes, were engaged in the production of steel pipes. Most of these pipes were used in industrial and civil construction.
The Tashkent Pipe Plant joint venture which was established in 1994 with the Russian Almetiyevsk Pipe Plant and the US Capital Industrial Supply is the most prominent in Uzbekistan. Today, this joint venture has a total production capacity of 60,000 tonnes per year and is a leader in the manufacturing of pipes with a diameter of up to 127mm and has a monopoly in the production of larger diameter pipes. In 2004, it started producing pipes for the oil and gas pipelines with diameters of up to 377mm and the company plans to actively participate in this market segment. In 2012-2016, JV will invest a further USD 52 million in the production of long steel products and manufacturing of electric spiral welded steel pipes with diameters of up to 1,620mm with a production capacity of 24,000 tonnes per year.
However, the capacities of these facilities are insufficient to meet the demands of Uzbekistan domestic market without including exports. JV openly says that it cannot develop more ambitious plans due to a limited access to foreign exchange resources for the purchase of raw materials and semi finished products.
A local analyst, Mr Dilmurad Kholmatov believes that Uzbekistan desperately needs its own steel pipe production. In his opinion, this is not only a serious consideration for Uzbek producers, but could also lead to potential supply problems for Uzbekistan because pipes would have to be bought from abroad.