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14 Jan, 11:48

Pipes and tubes demand in Russia to remain flat in 2025 — rating agency

The proactive demand growth is prevented by the high value of money in the Russian economy, under-investment and the relative shortage of capacity in the Russian oil and gas sector, the agency noted

MOSCOW, January 14. /TASS/. The National Credit Ratings (NCR) agency expects that the total demand on the Russian pipes and tubes market will stay flat in annual terms in 2025, according to its business review of the Russian tubular major TMK.

"In 2024, according to preliminary estimates, the total sales volume of seamless and welded pipes will go down by several percent because of market overstocking, voluntary oil production cuts in OPEC+ countries and a certain decrease in the activity of tubulars consumers. NCR forecasts the overall demand in the pipes and tubes market to stay in 2025 at the level of 2024," the review indicates.

The proactive demand growth is prevented by the high value of money in the Russian economy, under-investment and the relative shortage of capacity in the Russian oil and gas sector, the rating agency noted. The potential nevertheless remains for the increase in production drilling in oil and gas fields and the relevant demand growth for oil and gas field pipes, and for the mechanical engineering sector ramping up production as part of imports phaseout.

The business profile evaluation is also under pressure from the fact that TMK predominantly buys feedstock for pipes and tubes production (scrap iron, hot briquet iron and flats) from third parties, NCR noted.

TMK is the largest pipes and tubes producer in Russia and is among the top three leaders of the international tubular business.