Russia's Severstal aims to double large pipe sales in 2021 as demand recovers

Russian steel producer Severstal said it aims to double sales of large-diameter pipes (LDP) in 2021, after a decline this year, as it expects a rebound in demand from energy firms.

Demand for such pipes has been under pressure this year as the oil and gas industry globally reduced investments in new projects amid the coronavirus pandemic and due to completion of previous infrastructure projects, Severstal said.

The company, controlled by Russian billionaire Alexei Mordashov, plans to sell 400,000 tonnes of LDP in 2021 compared to 200,000 tonnes in 2020 and 383,000 tonnes in 2019, Dmitry Goroshkov, its head of sales to the energy sector, told reporters.

Severstal expects Russia's demand for LDP to rise to 1.6 million tonnes in 2021 and reach 2.5 million tonnes in 2022. This year demand is expected to fall by 29% from 2019 to 1.4 million tonnes.

Higher demand will be supported by new projects of gas giant Gazprom, a system upgrade by oil pipeline monopoly Transneft and the Vostok Oil project of Russian oil major Rosneft, Severstal said.

Severstal's Izhora pipe plant will return to full capacity next year, Goroshkov said.

"In 2020, unfortunately, we did not have full capacity utilisation (at the plant) from time to time, it went down to the level of 70% in certain months or 50% sometimes," he said.

Russia's oil and gas sector is expected to have cut investment by 20% this year from 1.4 trillion roubles ($18.7 billion) in 2019, the energy ministry said in September. 

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