OREANDA-NEWS. November 26, 2007.  Group of companies ESTAR plans to use the production of stainless steel pipes on the basis of the Volgograd Small Diameter Pipe Plant to become the first Russian manufacturer of decorative shaped pipes. The total amount of investments in the production upgrade at the enterprise is 400 mln rubles. In 2008 the company intends to produce up to 8,000 t of products per year and to oust the Italian suppliers from the Russian market. The market players and independent observers consider that ESTAR will manage to implement its plans only in case of decreasing the production expenses and improving the quality of products. 

Yesterday Andrey Saltanov, senior vice president of Group of companies ESTAR, claimed that the company intends to become the first Russian manufacturer of decorative shaped pipe made from stainess steel. ESTAR plans to produce the pipes on the basis of the Volgograd Small Diameter Pipe Plant (VSDPP) where the second stage of general production upgrade was finished and a mill for the production of round and shaped pipes from c/r stainless steel was installed. The total investments in the enterprise development and equipment upgrade amount to about 400 mln rubles. Operating capacities of the mill will be about 10,000 t of pipes per year with a diameter of 10-63.5 mm, cross-section of 15х15-50х50 mm (square pipes) and 20х10-60х40 mm (rectangular pipes). “In the nearest future we plan to start mill operation at the planned capacity and produce up to 16,000 t of diverse (8,000 t of stainless and 8,000 t of bimetal) shaped products per year”, noted Saltanov. “Consumption of stainless pipes in Russia is about 58,000 t, with only 20,000 t of Russian production whereas the market is growing, according to our estimations, on average 15% per year”. As Saltanov noted, in Russia there is currently no decorative shaped production and in this respect the enterprise strategy will be oriented on import substitution. “We plan to oust a part of foreign manufacturers, whose market share exceeds 60%, from the Russian market”, commented the top manager. Andrey Saltanov also noted that the enterprise expects a synergy effect from joining the production chains of stip supply and shaped production at the VSDPP. The new production is planned to be repaid in the course of the year however the amount of investments is not made public.  

‘The market of stainless pipes is small, so the manufacturers aren’t quick to enter there because the Russian enterpirses are in need of upgrading their capacities”, noted Yury Samorukov, general director of Group of companies Arinoy . “ESTAR will probably manage to implement its plans given low production costs”. The JSC Metal Plant “Hammer and Sickle” also plans to launch stainless pipes production in the nearest future but it refused to comment on the situation yesterday on the excuse of absent management. 

“It’s hard to estimate the total market volume of c/r and stainless steel because of its high segmentation, whereas the market volume of decorative pipes used in furniture production is about 15,000 t”, counted the analyst of Finam, Sergey Filchenkov. “Yearly growth of this market segment is about 15% that is stipulated by the development of Russian furniture industry and a high demand for the premium class products”. According to the expert’s opinion, ESTAR will manage to win the domestic market back from the Italian manufacturers through less transportation  costs, using local raw materials and cheaper labour forces. Filchenkov also noted that the demand for shaped products will keep increasing due to the growth of furniture production and construction in Russia. According to Sergey Doskov from Troyka Dialog, ESTAR will manage to implement its plans only if it produces high quality products because the consumers of this segment have high demands.