Market Position in 2010

Based on its results for 2010, TMK retained its status as the largest producer of pipes, selling 3,962 million tonnes of tubular products, which is 43% more than in 2009. The world economic recovery has led to an increase in global demand for tubular goods. The Company estimates that global consumption of tubular products increased by 7% in 2010. Moreover, the recovery of global demand in key markets where the Company operates — Russia and the United States — was more significant. In the key segment of seamless OCTG, which is used for drilling and oil and gas production, TMK’s Russian and global market shares in 2010 were estimated at 60% and 12%, respectively. TMK's share of the market for OCTG in the United States rose for the year to 14%.

TMK sales volumes by division

thousand tonnes Russian Division American Division European Division
  2010 2009 % change 2010 2009 % change 2010 2009 % change
Seamless pipes 1 699 1 426 +19% 253 109 +132% 169 114 +48%
OCTG 876 794 +10% 238 98 +143% 7 2 +250%
Line pipe 444 277 +60% 8 6 +33% 29 36 -19%
Industrial pipe 379 355 +7% 7 5 +40% 133 76 +75%
Welded pipes 1 290 871 +48% 551 249 +121% - -  
OCTG - 3 n/a 357 140 +155% - -  
Line pipe 221 169 +31% 59 14 +321% - -  
Large diameter pipe 700 311 +125% - -   - -  
Industrial pipe 369 388 -5% 135 95 +42% - -  
Total 2 989 2 297 +30% 804 358 +125% 169 114 +48%

TMK remains focused on supplying a wide range of products to the oil and gas industry, which in 2010 contributed to approximately 75% of the Company’s total sales. In Russia, TMK’s key customers are virtually all of the major oil and gas companies, including Gazprom, Rosneft, Transneft, TNK-BP, Surgutneftegaz and Lukoil. The Company’s American division, together with supplies to pipe distributors, meets the need of large energy companies such as ExxonMobil, Chesapeake, BP, Chevron and Marathon Oil.

TMK’s presence in global markets is supported by an extensive network of sales companies and representative offices. In 2010, the Company expanded its geographic presence by opening offices in two promising markets. Sales offices in the past year have been opened in Calgary, Canada, where new types of oil production are being developed, and Cape Town, South Africa, where the main objective is to strengthen TMK’s presence in the markets of sub-Saharan Africa, which demonstrate strong potential for development of the oil and gas industry.

TMK ships to more than 65 countries worldwide. Increasing measures to protect domestic steel pipe markets in 2010, mostly in the United States, have affected the structure of TMK shipments in various regions around the world. Increased competition in the less profitable segments of the Middle Eastern and African pipe markets has led to some reduction in the share of these regions in the Company’s total shipments. However, TMK increased exports of Russianmanufactured pipe products to the U.S. market, thereby offsetting increased price competition in other overseas markets.

In 2010, the Company continued to qualify its products with major global oil and gas companies and has successfully completed the process at companies based in Saudi Arabia, the United States, the United Kingdom, Germany, Spain, Italy and Indonesia. Last year TMK acquired the status of a qualified supplier to companies such as Saipem, Repsol, NABUCCO, ENI, etc.

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