Low demand and rising Chinese imports: what’s happening in the Ukrainian seamless stainless steel pipe market?

In 2023, the seamless stainless steel pipe market fell by more than three times compared to pre-war levels

How many seamless stainless pipes are bought in a country, and I will tell you what its economy is like. Some may disagree with this statement, but our experience in the global market shows that there is a direct correlation between demand for seamless pipes and the country’s economic development.

Speaking about Ukraine, the situation was not very good even before the full-scale invasion.

In 2021, the entire volume of our domestic market amounted to about 1 thousand tons in physical terms. For comparison, the Polish market is at least 5 times larger.

Unfortunately, the full-scale war has pushed us even further back, and now we are behind not only Poland but also our other neighbors on the other side of the western border.

In 2023, sales of seamless stainless steel pipes in Ukraine can be estimated at around 300 tons. That is, a drop of more than three times compared to the pre-war level.

There are several reasons for this.

First, after 2022, the size of the occupied territories increased in those regions where mining and metals and heavy industry enterprises, which previously provided a significant share of demand, are located.

Second, many operating companies have cut back on investment programs due to the inability to plan more than a few months or even weeks in advance. Thirdly, many companies were forced to freeze production or relocate production facilities to Eastern Europe.

The only sector where life is still “kicking” is the energy sector. Companies in this sector are forced to carry out repair and restoration work. In fact, it is currently the only driver of demand in the domestic seamless stainless steel pipe market.

However, there are some drawbacks. Every month, we see the Ukrainian market being flooded with pipes from Asia, primarily of Chinese origin.

For comparison, in 2021, we, as a Ukrainian manufacturer, had a market share of up to 45-50%. But after the full-scale invasion, pipes of Asian origin (in particular, Chinese) occupy up to 70% of the market.

Someone might say that this is the market, compete, prove that you are the best.

Yes and no. Thanks to our production technology and culture, we offer our customers a high-quality product. All European and American customers of Centravis will confirm this. But Chinese producers, thanks to subsidies from the Chinese government and low import duties to Ukraine, are able to offer pipes in some cases at 10-20% cheaper than our cost price.

At tenders in the energy and oil and gas sectors, we are increasingly facing a situation where Ukrainian customers (including state-owned ones) put forward requirements that can be met by pipes of almost any quality and origin. The market saturation with cheap Asian pipes puts Ukrainian producers in a difficult position. It’s not just a matter of reduced tax revenues and job losses. If we are talking about the scope of use of products, there is an impact on the safety and durability of certain projects in the energy sector. In other words, the dominance of products of Asian origin not only undermines the national economy, but can also have negative consequences for the country’s development and post-war recovery.

This raises whether it is okay for Ukraine to give up its domestic market to other countries.

I think the government should pay attention to this issue. Of course, if we want to keep the bar set for seamless stainless pipes and preserve the potential for the development of the high-tech industry during the post-war recovery.

As for Centravis, this is more a matter of dedication to our favorite business, which we continue to do with perseverance in our hometown, rather than a matter of critical economic benefit. The Ukrainian market does not exceed 1% of our sales. However, we want to see Ukraine become a developed high-tech country, not a country that sells low-quality pipes and other imported goods. We, as a manufacturer of high-quality seamless stainless steel and nickel alloy pipes, are ready to take a direct part in complex and interesting projects aimed at restoring and developing Ukraine’s energy potential. I am confident that our many years of experience can be useful in the above projects.