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OAO TMK Trading Update

OAO TMK (“TMK” or “the Company”), one of the world’s largest oil and gas pipe producers, and the market leader of the Russian pipe industry, today provides the following trading update in advance of the publication of its preliminary results for the year ended 31^st December 2006, which will be announced in May 2007.

Overall trading for 2006 has been in line with expectations and revenues are expected to be approximately 3.3 billion USD. During 2006 the Company has experienced a material improvement in margins. In accordance with management expectations, the EBITDA margin for the full year, whilst not quite reflecting the same as for the first half of 2006, will represent a substantial increase in margin over the full year 2005.

As previously stated, in 2006 TMK’s plants shipped more than 3 million tonnes of tubular goods, representing around a 3% increase over 2005. Within that figure, OCTG shipment volumes (products with higher added value) increased by over 16%. This growth was achieved at existing production facilities while the strategic investment program, which will add more than 1.1 million tonnes of seamless capacity by 2010, was being implemented.

Volumes of the pipes shipped by TMK’s plants in 2006

( K, tonnes )

In 2006 there was a strong demand for TMK’s products from both Russian and foreign customers, and the Company does not expect the market environment to deteriorate in the near future.

In 2006 TMK increased its share of sales outside Russia. While the overall growth of shipment volumes in 2006 was over 3%, shipments outside Russia increased by more than 8%. The region where shipment volumes grew most was the United States, where the increase was more than 90%. Shipments to the Middle East and Gulf States increased by approximately 7%.

The largest customers for TMK’s seamless pipes in the Russian market were Surgetneftegas, TNK-BP, Lukoil, Gazprom and Tatneft. These companies account for 28.6% of the total seamless pipes shipment volumes.

The main customer for TMK’s welded pipes is Gazprom which accounts for 25% of the total welded pipe shipment volumes.

In 2006 TMK managed to secure higher prices for its products against aggregated world prices. TMK’s prices for OCTG increased by between 15-20% during 2006, substantially ahead of the world price trend. Seamless line pipe prices grew by about 20% in the Russian market, and prices for industrial seamless pipes grew by between 15-20%.

Growth in electric resistance welded (ERW) average and small diameter industrial pipe prices, which was a reflection of the growth of investment into infrastructure projects and of the construction boom in Russia, increased by between 25-30% during the year. Despite some decrease in the overall profitability shown in the EBITDA, which was the result of an increased percentage of these pipes in the total shipment volumes, absolute EBITDA for these pipes rose, which contributed to the absolute growth of the EBITDA as a whole.

In 2006 there was a considerable increase in the price of scrap. Prices in the Russian market increased by between 25-30% which affected the increase in production costs in the second half of 2006. The Company believes that the price increase in 2006 closed the gap between Russian and export prices for scrap and it does not expect any significant price increase in 2007 and beyond.

Rises in prices for other raw materials (strips, pig iron and purchased billets) were not more than 15% in 2006. TMK has balanced the rise in the price of raw materials by increasing its prices for tubular goods.

The Company expects that the impact of fundamental indicators defining the demand for tubular goods will continue in 2007 and that prices for iron raw materials will stabilise close to the existing levels. The Company believes that the expected rise in prices for gas and electricity will not render any significant impact on TMK’s indicators, as the costs of these, within the Company’s overall production costs is not significant.

More than 300 million USD was invested in 2006 within the framework of the strategic investment program, with all the projects being implemented on time and within budget. Approximately 30% of the strategic investment program, which runs until 2010, has been financed to date.

In 2006 two continuous casting machines of one million tonnes capacity each were launched at Seversky Pipe Plant and Taganrog Metallurgical Works. TMK is also continuing to upgrade its high value-added, seamless pipe production capacity.