On one hand, mills are reluctant to operate below breakeven and have raised prices. On the other hand, demand has picked up slightly, driven by seasonal infrastructure repairs and a moderate recovery in the individual housing construction (IHC) segment. However, experts caution that it is too early to talk about a market recovery.
According to price indexes by RA Rusmet, as of June 29, the FOB Black Sea price for VGP pipes stood at 64,800 rubles per ton ($828/t), while ES pipes were at 65,300 rubles per ton ($835/t). These products had seen a steady price decline from summer 2023 through April 2024. A brief uptick occurred in May, followed by a period of price stabilization in June.
The current stabilization trend is largely attributed to seasonal demand, particularly due to mass maintenance and repair works in public utilities, reduced price volatility, and the refusal of producers to sell below cost, said Dmitry Orekhov, Managing Director at NKR rating agency. He added that expensive borrowing and limited access to investment capital are slowing down any potential growth, although government and municipal projects continue to support demand in construction and utility sectors.
However, experts agree that it's premature to interpret the current price levels as a sign of market recovery.
“Raw material costs for pipe production haven’t changed significantly,” noted Sergey Frolov, Managing Partner at NEFT Research. “The slight price increase is more likely tied to infrastructure restoration in newly integrated Russian territories.” The VGP pipe market is estimated at around 350,000–400,000 tons, while the broader welded pipe market (excluding oil and gas grades) is approximately 6 million tons, according to Boris Krasnozhenov, Head of Market Analytics at Alfa-Bank.
Krasnozhenov pointed out a significant decline in production of both VGP and ES pipes in the fourth quarter of 2024 and first quarter of 2025. Average quarterly production of VGP pipes typically hovers around 90,000–100,000 tons, but in the first quarter of 2025 it dropped to just 62,000 tons. Total production of ES pipes fell by nearly a quarter. He attributes this to underfunding of utility network modernization and the broader slowdown in residential construction, both of which negatively affect demand and prices for construction-grade pipes.
Large inventory levels held by metal traders are also exerting downward pressure on prices. RA Rusmet noted that even with the start of the construction season and planned maintenance at utility and energy facilities, no major price increases have occurred — only stabilization. “VGP pipe prices remained unchanged between early June and July,” confirmed Alexander Tkachenko, Vice President of FSK Group. “ES pipes saw a slight uptick due to local factors.” He added that demand growth is seasonal, and no significant surge is expected.
Still, experts from RA Rusmet remain cautiously optimistic, stating that this “price lull” cannot last indefinitely and a price correction toward growth is likely. This optimism is based on expectations that demand will at least remain stable and that producers will continue resisting unprofitable price levels. “When margins fall, mills prefer to hold prices at minimally profitable levels, especially if demand doesn’t collapse,” Orekhov explained. “Some form of artificial price support is likely, particularly as the market has already bottomed out and further decline would result in losses.”
Russia’s total pipe consumption in 2024 was approximately 11.05 million tons. Alexander Ruchyev, President of Osnova Group, stated that demand in 2025 is expected to remain close to 2024 levels. “High inflation, the state of the construction sector, and the broader economic context will prevent a significant rise in consumption,” he said. “Major government projects and modernization of utility infrastructure will continue to be the key drivers.”
NKR also estimates that the 2025 demand for steel pipes in Russia will range between 10 and 11.3 million tons, with ES and VGP pipes accounting for a substantial share. Currently, the only segment showing visible improvement in demand with the arrival of summer is individual housing construction. As a result, demand for small-sized profile pipes is on the rise, noted Krasnozhenov.
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