OREANDA-NEWS. On 26 August 2009 was announced, that soon a special protecting 28,1% duty for the import of stainless tubes to the territory of Russian Federation is possible to be introduced. It will make situation more difficult for all suppliers of stainless tubes, including Ukrainian ones. Despite this Centravis management estimates positively the perspectives of its business development. The basis for optimistic prognosis is the correctly chosen strategy of the development of the biggest Ukrainian exporter of stainless tubes.

Analysis of the economic situation

At the beginning of June The Special Committee on Outer Trade and customs-duty politics of the Government of Russian Federation recommended the Government of Russian Federation to introduce the special 28,1% duty for all import of stainless tubes to the territory of R F.

According to estimations of experts and market players, this decision will influence deliveries of Ukrainian stainless tubes in a discrimination way, as they belong to the most expensive segment of stainless tubes, delivered to Russia. At the same time 28,1% duty will hardly limit import of cheep Chinese tubes, which deliveries have greatly increased for last years, and are often made with violation of customs laws. Besides, this decision is a break of WTO norms and principles of the world’s trade practice.

In the period from 2005 to 2009 stainless tubes deliveries to RF were made according to the Agreement from January 13, 2005. Participating companies took voluntary self-limitations on the delivery of tubes to RF in the volume, which did not harm interests of Russian manufactures. Thus during 2004-2006 the volume of stainless tubes deliveries to RF from all countries increased for 207%, but the volume of import from Ukraine increased only for 11,9%, which was lower than the growth speed of the Russian market. Besides, prices for Ukrainian products were much more higher than those for products from other countries and those for tubes of Russian manufacturers — all these made price competition impossible.

Centravis readiness for duty introduction

CJSC “CENTRAVIS PRODUCTION UKRAINE” (Nikopol city, Dnepropetrovsk region) is one of the biggest manufacturers of stainless tubes in Ukraine and one of the biggest suppliers of the product to the territory of RF from Ukraine. Since 2005 the company has been delivering its products according to the mentioned Agreement.

If the special protecting duty comes into effect products of Nikopol plant of “CENTRAVIS PRODUCTION UKRAINE” (inter alia other Ukrainian manufactures) will be tariffed. Despite this, top-management of the company positively estimates perspectives of its business development on the territory of RF and excludes a possibility of having critical business-risks for the company.

For this the company has already implemented significant preparatory works:

— In 2009 the company completes the complex program of technical modernization of production with the total amount of investments more than USD 120 millions, and also the project of prime cost decreasing and productivity increasing. These measures will result in real economy of resources, significantly decrease of the prime cost of products and consequently will give a possibility to meet price competition even after duty introduction;

— Despite the fact that Russia is historically one of the main outlets, the company actively spreads geography of its distribution, exporting more than to 70 countries of the world. Among the most perspective markets are the market of Northern America, Asia, Middle East, Western Europe. For this the company opened its trade offices in 7 countries of the world, today working successfully.

Besides, Centravis has confidence about its business development on the territory of RF on the following basis:

— Centravis provides Russian enterprises of engineering, petrochemical, nuclear industries with unique highly technological types of tubes, part of which is not produced in Russia. These are tubes from DI 59 steel, tubes from 20 meters length from 08X14MF steel, etc.

— Centravis has long-term partner relations with clients from Russia. For the period of many years cooperation the company knows demands and expectations of the clients, provides individual complex tube decisions, which give it some advantages in comparison with other, even cheaper suppliers.

Yuriy Atanasov, CEO of International Holding CENTRAVIS: “We know that today active negotiations and search of optimal decision for suppliers from all countries are still going on. We hope that the made decision will take into account interest of, first of all, Russian consumers of stainless tubes, among those enterprises of such strategically important industries as energetics and machine building, and also will correspond to the norms of international commercial law. As for Centravis business, the complex program of the company’s modernization, which is to a considerable degree already implemented, guarantees its stable development despite the position of the Russian side”.