Russia's TMK, the world's third-largest steel pipe maker by market capitalization, is in merger talks with Ukraine's No.1 producer Interpipe, market sources close to the negotiations said on Tuesday.

Russia's TMK, the world's third-largest steel pipe maker by market capitalization, is in merger talks with Ukraine's No.1 producer Interpipe, market sources close to the negotiations said on Tuesday.

TMK, which raised more than $1 billion at a London listing last year, has annual revenues upward of $3 billion and a market capitalization of just under $8 billion.

One investment banker following the sector said he expected a busy deal pipeline. "Everybody is talking to everybody else in steel and mining. There are combinations of every shape and form under discussion," the banker said. Another investment banker predicted "a lot of movement" in the pipe sector in Russia in the coming months.

TMK is Russia's leading supplier of steel pipes, which are in high demand from the country's oil and gas sector. Soaring oil prices and an oil and gas exploration boom have boosted demand for steel pipes globally, the reason why many analysts are bullish about TMK's prospects.

TMK, which accounts for 56% of Russia's steel pipe exports, supplies products to companies in some 60 countries. Its clients include Anglo-Dutch Royal Dutch/Shell, France's Total and Spain's Respol as well as Russian majors LUKOIL, Rosneft and TNK-BP.

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