Many economic branches are centered around metallurgy. It not only about gas and oil recovery companies and mineral giants, but also about representatives of technology-related branches such as aviation, automobile, construction enterprises and many others. The reason for it lies in the extraordinary properties of metals and the development of technology by modern metallurgists.
The metallurgical industry is an important economic branch of all countries. In some countries metals are actively recovered and processed into finished products, whereas in others the authorities prefer to buy raw materials from other states. In the Russian economy metallurgy, both ferrous and non-ferrous, is the second most important economic branch after the oil and gas industry. According to various estimates, there are approximately 30,000 companies working in Russia that are related to metallurgical production one way or another. And, as estimated by experts, one worker engaged in steel production delivers products for 25 workplaces from related economic branches. This fact illustrates the backbone importance of this industry for the country in the best way possible. Metallurgy is the cornerstone, basis, structure for many production branches.
Around 2.2% of the able-bodied citizens of Russia (approximately a million people) work at metallurgical enterprises. And the number of employees has not been increasing over the last years which can be ascribed to the fact that metallurgical plants are modernized, new equipment is introduced and processes are automated.
Metallurgy’s share in the country’s GDP is about 5%, and in the industrial structure – about 18%. Metallurgical enterprises are one of the largest energy consumers (approximately 20% of all resources). Traditionally, metallurgy’s share in rail transportations is roughly the same.
Following the results of 2017, Russia became one of the top 5 global leaders in terms of steelmaking volumes. Our country produced 71.3 tons of steel which is 1.3% more than the results of the previous year. According to the data of the World Steel Association, the global production in 2017 increased by 5.3% as compared with 2016 and was 1,691 billion tons. In such a case, the steel production increased in all regions of the world, except for the CIS region (former USSR countries), with Russia being the only exception. Steelmaking leaders include China (831,7 million tons, +5.7% as compared with 2016), Japan (104.7 million tons; +0.1%), India (101.4 million tons; +6.2%) and the USA (81.6 million tons; +4%). The capacity utilization in the global ferrous metallurgy was 69.5% on average in 2017. This figure has been approximately the same in recent years. It exceeds 75% in the periods of a peak demand for steel: in 2013 the global metallurgy’s capacities were utilized at 78.4%, and in December 2016 – at 67.8%.
Metals are Everywhere
As is known, all metals and alloys are divided into ferrous (iron and iron-based alloys which is about 95% of all metallurgical production) and non-ferrous ones. In turn, non-ferrous metals are divided into light, heavy, refractory, precious, scattered, radioactive and other metals. There are also rare metals which are produced in very low volumes. For instance, the content of uranium, an important source of nuclear energy, in the ground is only 0.0003%, while the content of wolframium is 0.0001%. The majority of metals have a capacity to form various alloys; there are currently more than 10,000 known alloys.
The value of a metal is determined on the basis of its usability in various alloys, its characteristics, natural reserves of this metal, and the availability and profitability of its recovery. The most coveted metals in the present-day production are aluminum, iron, magnesium and titanium.
Iron is a most important element of almost all structures in the form of various steel alloys. Steel is better than aluminum in cases when a load is distributed along the entire system, and not centered around one point. Steel better tolerates vibration, is more resistant to heating, and, at long last, is cheaper. Steel alloys are the foundation of any building industry, rail transport and so on.
Metal products are the backbone of the majority of production industries, and metallurgy therefore performs strategically significant functions which serve as the basis for the country’s economy. Industries which would not exist without metallurgists include the shipbuilding industry, the automobile industry and the aerospace industry.
The pipe industry is an essential segment of the metallurgical industry. The industry has been on the rise in Russia over the last years. Pipe manufacturers have invested in the development of the industry more than 400 billion Rubles over 14 years. The production capacities of domestic enterprises have considerably increased. In such a case, the production of electric-welded pipes is averagely 70% of all products, while 30% is accounted for seamless pipes (more technologically advanced), and this market’s share is increasing.
There are three companies which are the leaders of the Russian pipe market; they produce approximately 80% of all products. They include ChelPipe Group, United Metallurgical Company (OMK) and Pipe Metallurgical Company (TMK).
ChelPipe Group (which unites ferrous metallurgy enterprises and companies, including Chelyabinsk Pipe Rolling Plant and Pervouralsk New Pipe Plant) produces the majority of types of steel pipes presented in the Russian market, including large-diameter welded pipes.
In general, the year was anything but simple for domestic metallurgists. According to preliminary data, the domestic consumption of steel products slightly increased as compared with the previous year, though the economic growth rate, especially in the construction sector, remains rather modest, experts say.
In the present context the largest Russian companies in this sector are ramping up their export deliveries and boosting the production of seamless pipes which are currently much-in-demand in the market. At the end of 2017 ChelPipe’s revenue increased by 17%. The volume of sales of pipes increased by 14.5% over the year and was approximately 2 million tons. ChelPipe’s share in the aggregate shipments of Russian pipe manufacturers also increased up to 17.5%. This growth is underpinned by an increase in export deliveries and a surge in demand for seamless pipes, officials of the company say. At the same time, the company set a new record in terms of seamless pipe production throughout the entire post-Soviet period – 1.2 million tons in 2017.
Amid a decline in demand for large-diameter pipes in the domestic market, Russian pipe manufacturers are successfully boosting their export deliveries. Last year ChelPipe for the first time delivered large-diameter pipes to Egypt (for the implementation of the liquefied gas transportation and storage project “Ain Sukhna Product Hub”) and Romania (for the repair of the existing gas pipeline and the construction of a new pipeline of the oil company OMV). Deliveries are under way to America, the Middle East and European countries.
In 2017 the company’s metallurgists participated in landmark projects: they delivered large-diameter pipes for the construction of the gas pipeline “Nord Stream 2”, tubular products for the reconstruction of the main sports arena in the Republic of Belarus – Dinamo Stadium – in Minsk, pipes and fittings for the modernization of main pipelines in Georgia. It is worthy of note that the key event in the financial sector for ChelPipe was the early redemption of syndicated loans in the amount of 80 billion Rubles which were borrowed in 2012.
Strategic cooperation with the largest Russian companies will be continued in the future. Last year ChelPipe Group entered into a long-term contract with Rosneft on the delivery of tubular products which will be based upon formula pricing. The company also reached an agreement with Gazprom and entered into a long-term contract on the delivery of import-substituting products for the development of the Kirinskoye and Yuzhno-Kirinskoye Fields located in the offshore area of the Sea of Okhotsk.
Alongside with the expansion of business contacts, the technological development remains a top priority of Russian pipe manufacturers. In 2017 ChelPipe Group mastered the production of a new type of pipes with a leak-proof threaded connection, Premium class, a new range of long-length pipes made of stainless steel for the petrochemical machine engineering, a welded pipe pile for bank revetment, seamless pipeline bends with an operating temperature ranging from -70°С to +450°С.