OREANDA-NEWS. February 8, 2008. Engels Pipe Plant (EPP), ESTAR Group, produced 71,700 t of products in 2007. Growth rate is over 12%. The year’s results show that its profit margin can reach 1.4 bln rubles (over 1.1 bln rubles in 2006).

The interests of pipe producing enterprises are affected by gradual increase of tariffs for gas and railway transportation. Federal Tariff Service has prepared proposals as to indexing the tariffs for railway cargo transportation: by 13.5% this year, by 9% in 2009 and by 6.5% in 2010. The key problem for the industry is the growth of prices for raw materials (about 80% of the price of product): they grew by 13% in the first half of 2007; by the end of the year this rate reached about 30%.

The prices for metals used for production of steel and nonferrous metal pipes in the last few years followed a rising trend. A significant contribution in this process is made by dollar devaluation and hedge funds that have entered the world commodity markets accompanied by a growing speculative component. As a result, the level of lowest prices for pipe products has been steadily rising (although at different rates), moreover, the situation allowed imposing the costs on consumer industries.

However, the growth of competition with foreign market players from Ukraine and China forces the holdings (with almost all pipe producing enterprises of Russia being their members) to pay more and more attention both to the growth of products quality and to self-supply of raw materials. The solution for these two tasks will be the focus of the main efforts of Volga pipe producing enterprises this year, Expert Volga informed.