TUBE AMNESTY IS ROUND THE CORNER. (Part 2)

Unlike the Russian initiators of quotas and anti-dumping duties (TMK and ChelPipe), for us seamless and welded tubes are two technologically different kinds of products that can be partially replaced. Why are we talking about the obvious things? Because they are not obvious to Russian’s Industrial and Trade Ministry , which lobbied for the initiation of increased import duties (not less than 1500 USD/tn) for different types of stainless steel tubes, and to the ECC, which piled up quotas for both seamless and welded tubes and pipes.
On November 1, 2014 quotas on stainless steel tubes and pipes into the territory of the Customs Union will expire. This means that the only import encumbrance for the welded tubes will be the import duty.
For the basic types of imported into the territory of the RF stainless steel welded tubes and pipes at the end of August 2014 the import duty will be 7.5%.
Will it be enough for domestic mills to keep the lead in the competition?
Until 2009, the only Russian manufacturer of the welded tubes was the Moscow Pipe Plant Filit. Business intuition of the management of the company Arinoi  broke that undivided authority and the initiation of additional restrictions on imports encouraged other companies to launch their own mills.
Currently, the leading Russian manufacturers of welded pipes including stainless are: Marcegaglia RU,  Rusinoks, TMK-INOX, MPP Filit, BaltInoks and Techno-Land.
It isn’t a secret that almost all Russian stainless steel welded tube products with the total output amounted to 15.67 thousand tons in 2013, are made ​​of import cold-rolled flat products.
Let's consider the possible competitive advantages of the Russian manufacturers.

1.The billet price of CR flat products (coil, stripe)
It’s doubtful whether in this segment the Russian companies will gain the cost advantage relative to foreign producers. The cost of the flat products for the manufacturers of welded pipes/tubes is determined by the amount of purchases, which depends on the number of tube welding mills and production volumes. According to our estimates, the total number of pipe welding mills in Russia does not exceed 40.
For your reference, average Chinese manufacturer of welded pipes, the company WEI HONG STEEL CO., LTD includes 32 pipe welding mills, 9 polishing and 3 grinding lines. And the Taiwan's leading manufacturer YC INOX produces about 10000tn of stainless steel welded pipes a month.

2. The assortment range and the quality of welded pipes.
In this segment, the advantages of the Russian companies are not observed as well. The assortment, sizes, grade composition of the produced pipes is limited.

3. The price and the cost of the production.
At this point the Russian producers have disadvantage on Asian companies. According to experts, the price of stainless steel welded pipes for construction AISI 304 from Taiwanese companies exceeds the price of the flat products by an average of 300-350 USD/tn. In Russia, this difference is at least 600 USD/tn.
The import duty on welded pipes (7.5%) allows to be secured in the amount of 100 USD/tn. Thus, domestic pipes in any case will be more expensive than the imported ones  on 150 USD/tn which is the amount of the minimum marginal allowance.

4. The promotion of the products.
The only real benefit of the Russian producers is a direct presence in the domestic market.
But what the potential buyer can learn about the benefits of a particular manufacturer?
The information about the company Marcegaglia Ru is displayed only on the corporate website of the group www.marcegaglia.ru/site/. In addition to the address, other information about the company activity is absent. Will it be sufficient for the image of the group to promote the products of  Marcegaglia Ru in the domestic market? Probably it won’t be enough.
The similar situation is with the company TMK-INOX. Although the company is officially a joint venture between Rusnano and TMK, the information about its activities can be found exclusively on the corporate website TMK www.tmkgroup.ru/tmk-inox.php. The direct contact information isn’t available. What products are manufactured is unknown. Only enthusiasts can gather data about the configuration on small things. Why was it necessary to spend a lot of money to buy the mills at MMP SERP I MOLOT and the company Arinoi to set a slitting line in Kamensk-Uralskiy while saving on a common site?
The detailed information on the activities, standards and products is displayed on the website of MTP Filit, www.filit.net. However, the price list of the company TD FILIT which deals with sales was empty.
The limited information about the company "Techno-Land" is available on www.russteels.ru. However, the management has assured us that they will launch a full version of a specialized site. Probably it will happen before the conference "From seamless solutions to the weld performance", which is holding by the company "Special Steel and Alloys."
The situation with the company Rusinox is much better. In early July the company launched a website www.rusinox-tubes.com, which shows the full information about the activities and plans of the company. Unfortunately we could not find a price list, sizes and assortment range. But most likely these omissions will be eliminated.
Among the above mentioned companies the certain leader in the providing the information to the potential customers is the company BaltInoks. The company's website www.baltinox.ru contains full information about the range of products, standards and above all the price list.
Summing up the positioning of the local mills of the welded stainless steel pipes in the Russian market, it should be noted that the ideal company should include all the benefits that each of them have: the image from Marcegaglia Ru, the validity from TMK-INOX, the longevity from  MPP Filit ,the certainty of  plans from Rusinoks, the advertising activity from Techno Land and the breadth of information from BaltInoks.
Unfortunately, they are all different companies.
Will they be able to compete with foreign producers? Time will leave a mark on it, the time that they have.
It will be recalled that in 2013 under the quotas 15,4 thousand tons of stainless steel welded tubes and pipes  were imported by the Russian companies.