03.08.2020

CENTRAVIS: our customer-related individual and project activities have top priority

Alexey Chertok, Metal Expert
Centravis is a leading global supplier of high-quality solutions in seamless stainless steel tubes segment. Yuriy Atanasov, Chief Executive Office of Centravis Production Ukraine PJSC has told Metal Expert how the Company develops new niches in the industry and, despite the crisis, keeps its production and sales levels, he has also told about the Russian representative office, Centravis Sales Rus activities.

– Centravis has been increasing its production for the fifth year in a row, even within the protectionist measures applied. How is it managed? What are the Company’s and its products appeals for customers/traders?
– Yes, it has, Centravis has been definitely increasing its production on regularly basis due to our team’s efforts in order to develop our sales of higher value-added products those are used in automotive, energy, chemical and nuclear industries. Keeping up with Asian companies at the US and European markets in general tubes and pipes segment, we will be behind in many positions, therefore the adopted development strategy in more niche products will pay off. In addition, Centravis has implemented its useful and transparent policy at the EU market; it is intended for our arrangements with distributors. As a result, we have active sale growth of tubes and pipes for projects; it is in addition to our distributors’ relations.
In view of the concept terms, our Company’s success is based on deep regional market studying and building the tactics and strategies based on the local business rules and market conditions available. Our successful distributors’ relations at the markets of Germany and Italy are good examples.

– The Company keeps a persistently high share of sales in Europe. I suppose the European market is one of the most closed, and it has also been hit by crisis significantly. What are your expectations in this area in 2020-2021?
– As they say, the European market is our most active customer, but, unfortunately, the crisis has also affected it. During the quarantine, many of our European customers have suspended their operations, and we, like the whole world, have been relieved as the coronavirus disease rates have shown the downtrend, and the global economy has begun to recover. As of today our sale level at the EU market is not as high as it has been, but Centravis keeps supporting its sales markets and reaching new customers, due to its sales offices’ concerted efforts. We have developed own strategy (its details cannot be disclosed yet) it is aimed at overcoming the crisis with minimal losses and reaching the previous sales level at the European market as soon as possible. Generally all contacts with our regular customers help us to respond to the situation in the industrial sectors concerned in a timely way and to be closer to the actual needs of our end customers. In 2021, we intend to keep the sales level that meets to the quotas, issued for tax-free delivery of stainless steel tubes and pipes from Ukraine. The crisis defines its own rules and it is a special challenge for us, and we readily meet this challenge.

– The Company has made a lot of efforts for our product range expansion (this year we have just implemented lean-duplex 1.4362, 1.4335 cold finished tubes production). Is there an appreciable effect of the development activities?
– When we develop new solutions, immediate effects will not be expected. We get a new wider portfolio, and the set of orders increases gradually. Surely we have already seen some increase in orders for new products, but we will be able to become aware of the result and calculate it by the end of the year. The key advantage of our Company is our sound research resources; we place special emphasis on our own scientific developments. Any new product process consists of several stages and it takes a lot of time and it is resource consuming. According to the development strategy of high value-added products, the Company has made a lot of efforts to develop new types of products in recent years. Particularly, our production process for 904L/1.4539 as high-alloyed austenitic steel grade has been developed, the range of the products made of Alloy 20 up to 219.1 mm and the range of instrumentation tubes in two-phase steel grades, including lean-duplex 1.4362/S32304, widely applicable and highly demanded in automotive industry have been broaden. It is a case of deciding everything by the team. Our team produces new ideas and develops new products: we have developed the production process for 1.4335 as high alloyed austenitic steel grade, so as to meet the engineering companies’ overall requirements for the urea projects. In addition to development of new types of products, we introduce solutions to confirm compliance with the customer’s specified requirements in terms of material engineering; it allows our Company to take part in major projects.

– The Company has been certified by TUV Nord, the certification covers Supercritical boiler tubes, and approvals of PETRONAS and Petroleum Development Oman have been received. Centravis has been previously comprised in the list of approved suppliers of Turner Industries Group projects and Petrojet, the Egyptian company. However, exports to the countries where these companies are based, keep on a small share in total shipments. What is the reason of this situation? Maybe some of the supplies are the shipments from representative offices outside Ukraine?
– It can take quite a long period from getting approvals to selling tubes for a project; therefore, it is too soon to estimate the share of shipments based on these certifications. But for our successful development at the markets of Asia and the Middle East, certification is a core factor. The finished product shall be approved and the Company shall be comprised in the product approval list. As we see the approved supplier status opens up fresh opportunities for supporting our customers in the region and developing our business on a global basis.

– What are your plans for production and sale development?
– The fact is that there are many market factors and we cannot control them. Therefore, today our purpose is to make tactically right decisions. First of all, we have to direct our efforts to the smooth production operations and regular shipments. The Company’s all internal processes improvement is
another area where we actively make investments, because these are exactly the factors those can be managed during a downturn. In particular, the prospect projects actively develops, they are aimed at decrease in metal consumption, increase in energy efficiency, lead time improvements in all Company processes, projects aimed at updating our equipment. Despite our previous ambitious plans to increase sales in the long term period, the current market downturn shows that we will be less deflectable in setting goals for the future. We think that it will be possible to review our strategy, when the market takes aim at its growth. Based on our survey, the market demand will be still low. The stokers’ request level will be low, but the market downfalls will be prevented due to our long term projects of our customers for supplying stainless tubes and pipes. It seems clear that high readiness projects will keep on implementation, the rest ones will be frozen. Thus, we expect decline in production in the current year, but today it is very difficult to predict the downturn range. We get excited about the real situation, it is better than our crisis scenario, which we have developed for the short and mid-term periods. As a result, one area of sales will level out the losses of another one.

– Russian area. It is seen some decrease in our shipments to Russia, although the Russian market shows its growth. Is it caused by the protective measures?
– Yes, it is. It imposes quite serious restrictions on our sales. All protectionist practices used by the Russian Federation to protect its own (domestic) manufacturers reduce competition as in terms of the product price and quality. There is fairly large number of competitions today, they are limited by the country of manufacture, the Ukrainian products are basically not allowed, and all volumes for thesedeliveries are performed by Russian manufacturers. We also feel pressured by the China suppliers; today they are more than 50% of the Russian market. Our pricing policy used for the customers is governed by preferential advantages of tenders, a lot of permits, customs and barrier duties, logistics. In this regard, we focus on high added value products, where Centravis brand helps us to promote our products. Our product quality helps us with sales at the Russian market; it covers the customers operated in power generation, oil and gas, as well as chemical industries, these customers value our products.

– Are there any changes in this area, particularly in Centravis Sales Rus representative office?
– The period of changes is the period of opportunities! The period when it is necessary to evaluate all advantages and disadvantages, make conclusions and re-arrange activities according to new market requirements. Today we see how the state-to-state regulations change, and the world economy changes – Covid-19 has made its adjustments to the global and Russian economies. We see downturn in output and consumption; advanced projects have been frozen or postponed till better days. And it is a huge incentive for us to change our customer engagement processes, to improve our product quality, services and facilities, even as we speak. It is difficult for us to compete with the China manufacturers in a mass product segment. And, of course, the key our competitors are Russian companies those perform renewals in order to improve their product quality. But we also see the world goes away from mass production. There are more and more projects at the market where a customer needs products having individual features. And our strategy is aimed at providing our customers with advanced products through very flexible and qualitative services. Our customer-related individual and project activities performed directly or through distributors are the priorities of the Russian representative office of Centravis, the key driver for the further development of sales at the Russian market.

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