Interpipe operates at 60-70% of pre-war capacity

According to the results of the first half of the year, the company fulfilled all production plans, all three divisions showed growth

Interpipe, a global manufacturer of steel pipes and railway products, is operating at 60-70% of its pre-war period. This was stated by the CEO of the company Andrey Korotkov in an interview with the agency Interfax-Ukraine.

“Capacity utilization is different in different divisions. The situation in the pipe and railway divisions is different, in addition, there are differences by quarters. But if you take the average figure, then the company’s capacities are loaded somewhere by 60-70% compared to the pre-war period,” he said.

At the same time, as Andrei Korotkov noted, the undermining of the Kakhovskaya hydroelectric power station by the Russian invaders did not affect the work of enterprises in the Dnieper, only indirectly on the production process of the Interpipe Steel plant, which produces blanks for pipe enterprises in Nikopol. For Nikopol enterprises, the situation was worse and affected their performance. Now the process is stable.

In general, Interpipe completed the first half of this year with growth in indicators: steelmaking – by almost 20%, pipes – by 5% and railway – by 17%. Thus, despite the negative factors, the company has fulfilled all production plans.

So far, the company has begun building up a reserve of semi-finished products amid expected winter power outages, as the company’s industrial assets cannot be healed from alternative energy sources.

“We have taken a deep look at possible alternative sources of electricity and have come to the conclusion that these mobile generators are not suitable for our industrial assets and their modes of operation. In this way, small and medium-sized enterprises can solve their problems. Therefore, we are forced to remain on the existing electricity supply scheme and completely depend, like a year ago, on the state of the Ukrainian energy system,” the company’s CEO comments.

It should be noted that from July 1, 2023 NEURC price caps for electricity by raising tariffs by 40-80%. According to Korotkov, the corresponding changes increased the cost per ton of products and increased its average price by 15%.

“This is a significant increase! We have changed the work schedules of the Interpipe Steel plant as the main consumer of electricity within the company. So by changing work schedules and stopping work during the most expensive evening hours, we have not increased our energy costs as much as those who work on a completely continuous schedule, 24 hours a day,” he added.

Thus, Ukrainian industrial products are becoming less competitive in export markets, given the 1.5-fold increase in shipping costs. Currently, the share of sales of products for export is 80-85%, depending on the types of products and the period.

The main consumers of the company’s products in Ukraine are Ukrzaliznytsya and Ukrnafta. At the same time, Chinese and European manufacturers are present on the domestic market. In particular, Chinese products do not always have fair competition.

“We expect that capacity utilization by the end of this year will remain somewhere at the same level as it is now. Everyone found new modes of operation, optimized them. In my opinion, the process is already more or less well-established, but we will see what winter will bring us,” the Interpipe CEO sums up.

Recall that according to the results of January-March 2023, Interpipe increased steel production by 13% compared to the same period in 2022 – up to 184 thousand tons. Production of pipe products increased by 12% y/y – to 105 thousand tons, and the railway – decreased by 13% y/y, to 20 thousand tons.

“Interpipe” is an international vertically integrated pipe and wheel company, one of the top 10 manufacturers of seamless pipes in the world and the top 3 manufacturers of solid-rolled railway wheels.