East Pipes expands output capacity to meet growing demand, boost market share: CEO

 Mohammed Al-Shaheen, CEO of East Pipes Integrated Company for Industry 

East Pipes Integrated Company for Industry’s decision to expand production capacity comes in support of its upbeat outlook for rising demand for pipes, especially spiral arc welded pipes, arising from the strategic projects of the Kingdom's Vision 2030 in the oil and gas, water and infrastructure development sectors in the coming years, CEO Mohammed Al-Shaheen said in an interview with Argaam.
 
The company aims through this expansion to leverage the growing demand for pipes by increasing its production capacity to meet customer requirements. Such expansion comes in line with the company's strategic objectives to boost its market share, he added.
 
East Pipes’ production capacity currently stands at 400,000 metric tons per year, said Al-Shaheen, indicating that it will increase after this expansion to 500,000 metric tons per year.
 
He also pointed out that this expansion represents a surge in production capacity, which enables East Pipes to meet growing demand and explore new market opportunities, noting that its presence in the current plant in the Second Industrial City in Dammam provides an ideal opportunity to integrate operations and balance expenses and resources.

As for financing the construction of the new line, Al-Shaheen indicated that the construction of the new production line will be financed through the company’s own resources, bank facilities, and other financing schemes. He highlighted that the company has net cash flows to support the expansion without relying heavily on external financing or equity, which confirms the strength of its financial position and prudent management of its resources.

The CEO expects that demand for spiral arc welded pipes will remain strong due to their wide use in vital sectors such as oil and gas pipelines, water transmission systems, and infrastructure projects.

He added that the planned expansion in gas projects in addition to the announced mega water desalination projects are likely to generate significant additional demand for spiral arc welded pipes, as the company’s expansion comes at the right time to keep pace with this growing demand in the market.

Regarding the impact on the prices of the company’s products, with the increase in production capacity, it may leverage economies of scale, which may lead to lower production costs at the ton level, which enables the company to offer competitive prices while maintaining or improving current profit margins, taking into account the natural variation in raw material prices from time to time and the different nature and specifications of projects. The ability to meet increased demand generally strengthens the company’s negotiating power with its customers, which leads to price stability or improvement depending on other factors, according to the top executive.

According to data available with Argaam, the company signed earlier this month contracts with different entities to establish a new production line for Helical Submerged Arc Welded (HSAW) pipes in the company’s factory in Dammam 2nd Industrial City.

The pipe manufacturer will embark on the project this month, it added, expecting it to be complete in Q4 2025/26.

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