Price as an indicator of quality

Price as an indicator of quality:

Prices for non-treated previously used pipes are little different from the average prices of each region. This is due to the fact that purchase of non-treated previously used pipe is like buying “pig a in a poke”. You can say the same regarding treated (renovated) pipe. All defects can be easily observed on a surface of cleaned pipe. There is no point talking about the average price for renovated previously used pipe.

Let‘s review the key aspects of price formation for treated previously used pipe. Buying and selling advertisings of used pipes besides dimensions and primary usage also indicate a degree of pipe treatment. The complete cycle of pipe treatment includes the following: cleaning from exterior insulation, sandblasting or other type of cleaning to remove the remaining insulation and traces of corrosion, internal cleaning using any method, cutting bevels (facing). Often some stages of treatment process are skipped. Sometimes gas pipes are not cleaned inside; or bevel is not cut on a pile pipe and etc. Of course, the price of previously used pipe depends on degree and quality of treatment but not very much. Prime cost of treatment process is not very high (1500-3000 rub for a ton).

How did the prices for renovated pipe become two-three times higher than the prices for raw materials? Due to poor awareness it is possible to think like this: non-treated oil pipe costs 8000 rubles, treatment process – 2000 rubles for a ton, renovated pipe is sold for 15000 rubles. The profit is 5000 rubles. Nothing like that. The thing is that during the treatment process, hidden defects are always detected on previously used pipes (shells under insulation or buildups inside a pipe, dents etc.) Figure # 1 shows picture of the real pipe which has been received with external film insulation. Externally this pipe looks pretty well. Some penetration defects caused by electrocorrosion have been revealed after insulation removal. Figure # 2 shows photographic evidence of defects caused by electrocorrosion on the pipe used for gas when insulation was removed and sandblasting performed ( such defects were revealed on half of the pipes from this lot). At that, the surface of the remaining pipes was in the perfect condition. And this is not the worst case. Unavoidable quality inspection leads to sharp increase of the prime cost. Some pipes have to be sold with prices cheaper than their prime costs since all defects are on the surface now! Or should we cover this pipe with bitumen again, shouldn’t we? Sometimes after test treatment of a few pipes from the lot the conclusion is to stop treatment process. It is easier to get rid of a non-treated pipe – defects are not visible. Renovated pipe of a good quality – is a big luck!

Those who are engaged into pipe dismantling activities find themselves in the same situation. Standard situation: trial pits show that the pipe isn’t bad. All payments are done and excavation has begun. And suddenly (Figure 3), the pipe appears to be of an awful quality suitable for scrap only. If all finances have been put on stake – this would be a complete finance failure. And everything seemed to be so crystal clear – pipe in the ground for 3000 rubles, dismantle expenses – 2000 rub., selling for 8000 rub. That is why companies specializing in dismantling activities prefer to pay the pipe in stages as the works are proceeding.

Business of previously used pipes in very risky. If You are lucky You can make good money, but You can lose it all. Usually small fortunes are interchanged by small failures. So, the profit rate in pipe business in average is the same as in any other. Someone reaches the stability by playing on season price variations; someone surfs though out the vast of the Motherland searching for successful options.

It is clear that quality and price of raw materials directly flow to quality and prices of a treated pipe. The better the raw materials are the higher the price is. High quality treatment does not come for free. Mechanical facing is more expensive than the one cut with “Orbit”. The more expensive the equipment is the higher is the quality of the treatment process.

But the final product is evaluated not only as per the amount of money spent for it. If a pipe has factory-made bevels but shells can be seen with the naked eye then who will take a closer look at those bevels? Overall condition of a treated pipe determining the future fields of its application – that is what a Buyer is interested in at the first place.

The first postulate: the price for a treated previously used pipe is the best and the most reliable indicator of this pipe’s condition! All pipe specialists know that. Nobody sells pipes much more expensive than others. Why to give advantages to competitors? On the other hand, there is no reason to greatly lower the price (of cause, situations can be different, but it is not rational to count on them).

The second postulate: the correlation between price & quality of a treated previously used pipe is the same all over Your region. There can be differences in different regions, but transportation and travel expenses will absorb Your possible benefit.

The third postulate: if between You and Pipe Owner appeared intermediate agents than the price of such pipe will be higher in comparison to its quality. What is the point of saying that? Before going to review a pipe at site, any Buyer makes a research looking for the worth options. Either he analyzes advertisings or calls suppliers. So, when they describe the quality of their products all suppliers tend to, mildly speaking, exaggerate. But quite few people will boost up the price (beside intermediate agents)! In other words, if there is a serious mismatch between verbal description (photo) of a pipe and its low price, You should trust the price. Experienced pipe specialist will never go to inspect an excellent gas pipe sold for 6000 rub for a ton. There are no miracles. In the beginning of his career, everyone has toured around to understand the price for such proposals: either there will be no pipe, or the pipe will be not the same as the offered one – instead of a gas pipe there can be water pipe, instead of longitudinal pipe – helical one and etc. Sometimes this happens due to mistakes made by intermediate agents (“a broken telephone”). Sometimes it can be a fraudulent intent: let them come, and when meeting is ongoing we can push something to them. There aren’t so many stolen pipes now, so You shouldn’t hope for a miracle to happen. Especially any trip takes time and money. Average efficiency of business trips in search for new partners: for 1 productive trip there are 2-3 useless.

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