OREANDA-NEWS. April 12, 2010. The duty free imports of steel pipes from Ukraine to Russia ended as of April 1. The term of agreement between Russian and Ukrainian governments about quotas for duty free imports of Ukrainian pipes expired on March 31, but no new agreement has been signed yet. Therefore, since the beginning of 2Q2010, import duties from 8 to 55% will be levied on Ukrainian pipe products from then on.

This news is extremely NEGATIVE for Interpipe Holding because it was the biggest pipe supplier working under the framework of this agreement. The share of its sales to Russia amounted 40% of the total, and it will be rather difficult for the Company to redirect such significant volumes of their products to other markets efficiently. It will be impossible for the Company to stay on the Russian market with the new prices due to inferior quality of its pipes by comparison with those of the Russian producers, since the low price was the only competitive advantage for the Ukrainian producer. Despite the negotiations still going on between the Governments, Millennium Capital thinks that the second quarter of this year will have been lost for Ukrainian pipe producers.