The state of the pipe market in 2013 and prospects in 2014

In 2013, sales of Russian pipe products increased by 4 percent YoY, mainly driven by higher oil consumption and gas pipeline construction.
Throughout 2013, the consumption of seamless OCTG pipe grew, supported by the activities of oil and gas companies and an increase in the share of non-conventional drilling. For the full year 2013, the share of horizontal drilling increased to 21 percent of the total footage of the oil well.

For the year 2013, the market for seamless industrial pipes declined 3 percent year on year due to weak consumption in mechanical engineering, while the market for welded industrial pipes increased 4 percent compared to 2012.
In America in 2013, according to Baker Hughes, the average number of rigs decreased by 8 percent from 1919 in 2012 to 1,761 in 2013 as natural gas drilling operations continued to decline.

Although the number of rigs declined, the pipes were used by operators who continued to drill in the horizontal direction, which increased from 71 percent in 2012 to 75 percent of the total number of rigs in 2013.
In addition, the decrease in the number of rigs was partially offset by the increase in drilling efficiency. The average number of wells per rig increased by 6.5 percent from 4.92 in 2012 to 5.24 in 2013.

In 2013, there was a market trend towards a decrease in product tubular capacity in the European Union, which will continue in 2014. Additional problems come from strong competition for cheaper imports of pipes produced in Ukraine, China, India and other countries, where the cost of raw materials and electricity, as well as environmental fees are significantly lower than in Europe.

In 2014, companies in Russia are planning to increase the pipe market mainly due to the growth of oil consumption and the construction of gas pipelines. In the United States in 2014, TMK expects further improvements in drilling and its horizontal length, as well as the number of directional rigs in relation to the total.