 The Gazprom headquarters hosted a regular meeting of Alexey Miller, Chairman of the Company’s Management Committee and heads of Russian pipe manufacturers.
Taking part in the meeting were Deputy Chairmen and Members of the Gazprom Management Committee, heads of the Company’s specialized structural units and subsidiaries, Ivan Shabalov, Chairman of the Pipe Producers Association Coordinating Council, Anatoly Sedykh, Chairman of the United Metallurgical Company Board of Directors, Dmitry Pumpyansky, Chairman of the Pipe Metallurgical Company Board of Directors, Andrey Komarov, shareholder of Chelyabinsk Pipe Rolling Plant and Alexey Mordashov, Director General of Severstal.
The meeting was focused on using the price formula when buying large diameter pipes (LDP). It was noted that applying the price formula allowed building up the long-term relationship between Gazprom and the Russian pipe manufactures. In addition, the price formula is supposed to be used during tender procedures for choosing suppliers of the pipe products acquired by Gazprom, provides for transparency of the price formation and eases the way for predicting changes in pipe prices. For instance, the LDP price calculated beforehand using the price formula and the stock quotes dynamics between December 2011 and April 2012 decreased by 3 per cent against the price agreed with the pipe manufacturers. The main reason for that was the price cut for metallurgical raw materials. The price for the next six months will be set in June.
At the meeting the Agreements on using the price formula for LDP were signed between Gazprom and Russian LDP manufacturers: United Metallurgical Company, Pipe Metallurgical Company, Chelyabinsk Pipe Rolling Plan and Severstal (Izhora Pipe Plant).
At the meeting the Agreements on using the price formula for LDP were signed between Gazprom and Russian LDP manufacturers: United Metallurgical Company, Pipe Metallurgical Company, Chelyabinsk Pipe Rolling Plan and Severstal (Izhora Pipe Plant).
“The price formula is the cornerstone of our relationships with Russian pipe manufacturers. We are not going to be concentrated just on large diameter pipes. We are actively working on setting the price formula for other types of pipes, including the seamless pipes,” said Alexey Miller.
During the meeting held in November 2011 Alexey Miller, Chairman of the Company’s Management Committee and heads of the leading pipe manufacturing companies approved the price formula to be applied when concluding contracts for pipe products supply, primarily large diameter pipes (LDP).
The LDP price formula takes account of:
· The price quotations for metallurgical raw materials (iron-ore concentrate, coking coal and scrap steel);
· The behavior of prices for steel sheets and large diameter pipes;
· The index measuring changes in prices for the industrial commodities sold in Russia by manufacturers.
Variations in the indicators constituting the price formula will be tracked on the basis of data obtained from the Economic Development Ministry of the Russian Federation and specialized information agencies (in particular, Steel Business Briefing and Metal Bulletin Research).
It is planned to elaborate the price formula for other types of pipe products before the end of 2012.
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