Ukraine-based Interpipe, one of the world's leading producers of steel pipes and rail wheels, commenced production and sales of steel billets last October. Answering SteelOrbis' questions, Fadi Hraibi, chief commercial officer of the company, explained Interpipe's vision regarding the steel billet market.
What was the motivation of Interpipe in getting involved in steel billet manufacturing and what is the importance of billet production in the company's overall production structure?
The steel billet made by Interpipe Steel is an independent product, though it has the same competitiveness as pipes and railway wheels produced by Interpipe. Therefore it would be logical to consider Interpipe's electric steel-melting complex as a separate business. The quality of steel billets produced at Interpipe Steel complies with all the technological requirements of European pipe and railway wheel producers. This is why we have every reason to assume that our mill's billet products will meet good demand in the export markets. Export deliveries of billets to external buyers will ensure the growth of the company's export revenues and eventually of the company's income.
What type of billets do you produce for your own usage and what types are offered to your customers? What is the annual production capacity and what annual export volume do you expect to achieve?
Interpipe Steel can produce billets of carbon and alloyed steel grades with diameters ranging between 150 mm and 290 mm. In particular, these steel grades may be used for the production of line pipe according to API 5L, ASTM, and GOST standards, as well as for the production of casing and tubing according to GOST and API 5 CT standard requirements.
The designed billet production capacity rate of Interpipe Steel (1.32 million tons a year) has exceeded our own need for steel billets. In June this year, the mill reached a production capacity of 100,000-110,000 tons of steel billet a month, which fully covers the internal consumption of the company and provides us with the possibility of exporting up to 200,000 tons of steel billets a year in the years to come.
In addition, the company previously announced the commencement of construction of Interpipe Steel's second billet casting line. The launch of billet sales is the groundwork for the development of a customer base and volume of orders for future operations.
Where do you export billets?
Consumers of Interpipe Steel products include manufacturers of pipe and wheel products. We consider the markets of Europe, North America (the US, Canada and Mexico), and the Middle East as the key ones for steel billet sales in 2014. Our company has a long-standing experience of operations in these markets, and we understand the needs of customers in these locations quite well. Our advantages are obvious for the customers: the product is made at a state-of-the-art mill, quality is guaranteed and the price is quite competitive.
Forging facilities are also among the most promising consumers of the steel billets made by Interpipe Steel. At present the mill has developed steel grades of A350 LF2 and 42CrMo4 for the production of flanges and rings. A trial lot of such steel billets has been already sent to Europe for tests.
Do you sell billets to the Ukrainian domestic market? Who are your main customers there?
The domestic market for sales of our steel billets is quite thin; therefore the market is expected to show only some limited growth. At present, we are already collaborating with Ukrainian producers of railcar axles and we intend to continue this collaboration next year.
