OREANDA-NEWS. The following contains forward looking statements concerning future events. These forward looking statements  are based on current information and assumptions of TMK management concerning known and unknown risks  and uncertainties.
TMK, one of the world's leading producers of tubular products for the oil and  gas industry, announces its operational results for the first quarter of 2014. 

1Q 2014 Highlights

In the first quarter of 2014, TMK shipped a total of 1,022 thousand tonnes  of steel pipe to consumers, down 3% and 8% year-on-year and quarter-on-quarter respectively. The drop in shipments is mainly due to  lower  demand for seamless and welded line pipe, as well as large diameter  pipe (LDP).

Seamless pipe shipments amounted to 626 thousand tonnes, which is  flat year-on-year but down 3% quarter-on-quarter.

Welded pipe shipments in the reporting period fell by 9% year-on-year to  396 thousand tonnes. It was LDP and welded line pipe segments that  saw a decline.  Welded pipe shipments dropped by 16% quarter-on-quarter.

The total shipments of OCTG pipe, TMK’s core product, remained flat as  compared to the previous quarter and were up 13% year-on-year,  reaching 491 thousand tonnes.

Shipments of premium connections in the first quarter of 2014 amounted  to 193 thousand joints, up 18% year-on-year,  but down 4% quarter-on-quarter.

Decrease in shipments  and  less favorable product mix of  OCTG  pipe  (including premium connections) and seamless line pipe, coupled with  the rouble devaluation, will  put some downward pressure on  TMK's 1Q  financials in comparison to the expectations.

Russian Division

By 2014, key tubular products  consumers had stocked up considerable  inventories, which reduced demand for oil and gas pipe and and industrial pipe  in the first quarter of 2014.
In the first quarter, TMK's Russian division shipped 682 thousand tonnes of  tubular products, down 9% and  10% quarter-on-quarter and year-on-year  respectively.
The Russian division's seamless pipe shipments  decreased by 5% quarter-on-quarter to 454 thousand tonnes. The Russian division increased seamless  OCTG pipe shipments by 5% quarter-on-quarter and 7% year-on-year, with a  total of 272 thousand tonnes shipped.

This includes shipments from TMK’s Russian facilities, TMK-Kaztrubprom and TMK GIPI to the Russian, CIS and  non-CIS markets (excluding the North American market).
Seamless line pipe shipments were down by 22% quarter-on-quarter and by  31% year-on-year.
Shipments of seamless industrial pipe fell by 7% quarter-on-quarter,  but rose  by 3% year-on-year.
In the first quarter of 2014, large diameter pipe shipments amounted to  77 thousand tonnes, down 19% quarter-on-quarter. This decline is due to the  completion of several pipeline projects in late 2013.
American Division
Due to expansion of horizontal drilling and  an increasing number of active rigs  in the U.S. and Canada, the demand for OCTG pipe in the American market  grew by 4% in the first quarter of 2014. Nevertheless, the market continues to  be affected by considerable volumes of tubular product imports, the  majority of  which is under current review by the U.S. Department of Commerce to  determine compliance to fair trade practices.
In the reporting period, TMK's American division increased its shipments by  14% year-on-year, reaching a total of 298 thousand tonnes of tubular  products. As compared to the fourth quarter of  2013, the total shipments fell  by 7% due to a decline in shipments of welded OCTG and line pipe  related to  the extreme winter weather conditions in the U.S. and Canada, which impacted  both railroad and truck service.
Seamless OCTG pipe shipments amounted to 98 thousand tonnes, virtually  unchanged quarter-on-quarter and up 21% year-on-year.
In the first quarter of 2014, the American division shipped 114 thousand tonnes  of welded OCTG pipe, down 13% quarter-on-quarter, but up 15% year-on-year.  Welded line pipe shipments went down by 33% quarter-on-quarter due to a  seasonal decline in demand,  as well as, the impact on transportation logistics  previously mentioned. The same factors accounted for the drop in welded  industrial pipe shipments, which were down 7% quarter-on-quarter.  Also,  during  the first quarter of 2014, the American division took a series of steps to  reduce the  production and  share of low-margin welded products in its total  output in response to low priced imports.

This includes products manufactured by TMK’s Russian and Romanian facilities and sold on the North American  market.

European Division
The first quarter of 2014 saw early signs of recovery in the European  pipe market. While consumption remains low, demand is mainly driven by tubular  product distributors stocking up their inventories.
In  the reporting period, the European division shipped a total of 41 thousand  tonnes of pipe, up 3% year-on-year, but down 5% quarter-on-quarter.
Premium Segment
TMK ships pipe with premium connections and also provides threading  services for third parties. The demand for TMK UP premium connections  remains high, sustained by expansion of  directional  and horizontal drilling in  America. However, many American energy companies continue transition to oil  drilling, reducing the overall number of gas rigs and restraining demand for  premium connections, a product widely used in natural gas production.
During the reporting period, TMK shipped  more than  193 thousand  joints of premium connections, up 18% year-on-year.
TMK expects the 2014 demand for tubular products in Russia to follow a slight  downward trend due to the unstable macroeconomic environment, exchange  rate volatility and uncertainty in commodity markets. Still, the Company is  planning to increase its shipments of seamless OCTG pipe, including those  with premium connections.
In the American market, TMK expects demand for OCTG to continue to  improve as the  number of wells and footage drilled increases with the  average  rig count, both in total number and particularly in the number of horizontal rigs.
However, the American division expects a minor decline in welded pipe  shipments  due to continued pressure from unfairly priced imports. TMK also  expects a stronger demand for line pipe in the U.S.
The Eurozone economy is projected to return to cautious growth in 2014, which  will gradually drive tubular product consumption in Europe up.